Federal Reserve rate cut: The Fed just made its call — will your money grow, shrink or disappear? Here’s the impact
Following the meeting, Jerome Powell’s press conference and the FOMC’s dot chart gave signals about the future path of interest rate cuts. Before the announcement, most forecasts expected two rate cuts in 2026, one in early summer and the other in the fall. However, according to Yahoo Finance’s report, Powell and the FOMC now suggest that only one interest rate cut is possible next year and another in 2027. Interest rate cuts flow into the economy and change the amount of interest people pay or earn on different financial products such as loans, deposits and credit cards.
Checking and savings accounts
Current accounts earn very little interest; The national average is 0.07% and this rate may decrease further due to interest rate cuts. Checking accounts remain low because the convenience of easy access to money means low earning power, almost like “money under the pillow”.
Savings accounts pay slightly more at 0.40%, but these accounts are only useful for short-term money. High-yield savings accounts still yield close to 4 percent, but as Yahoo Finance notes, those rates could drop as rates drop. This is one area where rate shopping really helps, especially when overall interest rates fall.
Regular money market accounts only pay 0.58% even if you keep more than $10,000 in them. But high-yield money market accounts are still around 4% or slightly more, making them a better option right now.
Certificates of deposit (CDs)
CD rates have risen slightly recently, but 12-month CD rates are currently down to 1.64%. There are better CD deals available, but you have to search online and move the money, and rates depend on minimum deposit amounts and term length.
Mortgages and personal loans
The big question many people are asking is: “When will mortgage rates drop to 3%?” Answer: It’s not likely to happen anytime soon. Mortgage interest rates have fallen slightly since May and are about half a point lower than they were a year ago, according to a report from Yahoo Finance. But the Fed’s rate cut won’t lower mortgage rates by much because mortgages still track 10-year Treasury yields, which are above 4%. Housing analysts from the Mortgage Bankers Association and Fannie Mae expect mortgage rates to remain around 6% through 2026. Personal loan rates have finally dropped to 11% after staying near 12% for almost two years, and advertised rates are now around 8%, which could drop a little further after the Fed’s cut.
credit cards
Credit card interest affects everyone except those who pay their full balance each month. Credit card interest rates rose from 15% in 2021 to over 21% in 2025, and strangely, they did not fall even as the Fed lowered interest rates, Yahoo Finance noted.
Yahoo Finance tip: “The best way to get a lower credit card interest rate now is to ask.” If your credit score has increased, call your bank and ask for a lower rate.
Stock prices react to Fed decisions, but rates are only one factor, so investors need to watch economic and profit trends as well. For safer strategies, experts say to choose high-quality stocks that remain strong through all economic cycles and then look for long-term growth.
FAQ
Q1. Why did the Fed cut interest rates again?
The Fed reduced interest rates to support the economy, but also signaled fewer interest rate cuts than expected for the future.
Q2. How will the Fed’s interest rate cut affect my savings interest?
Savings rates may fall because banks typically lower interest rates on deposits when the Fed lowers interest rates.
