What the Fed’s Moves Mean for Mortgages, Credit Cards and More (2024)

American households who were hoping interest rates would soon decline will have to wait a bit longer.

The Federal Reserve kept its benchmark interest rate unchanged on Wednesday, noting that progress on cooling inflation had stalled.

The central bank has raised its key interest rate to 5.33 percent from near zero in a series of increases between March 2022 and last summer, and they’ve remained unchanged since then. The goal was to tamp down inflation, which has cooled considerably, but is still higher than the Fed would like, suggesting that interest rates could remain high for longer than previously expected.

For people with money stashed away in higher-yielding savings accounts, a continuation of elevated rates translates into more interest earnings. But for people saddled with high cost credit card debt, or aspiring homeowners who have been sidelined by higher interest rates, a lower-rate environment can’t come soon enough.

“U.S. consumers should be prepared to continue to face relatively high interest rates across a range of credit products for a while longer, with any potential rate decreases likely being pushed to later in 2024,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion, one of the nation’s three largest consumer credit companies.

Here’s how different rates are affected by the Fed’s decisions — and where they stand.

Credit Cards

Credit card rates are closely linked to the central bank’s actions, which means that consumers with revolving debt have seen those rates quickly rise over the past couple of years. Increases usually occur within one or two billing cycles, but don’t expect them to fall quite as rapidly even when rates eventually decline.