The U.S. Federal Reserve has ended 2025 by delivering another interest rate cut, responding to an uncertain economic environment. The central bank lowered interest rates by a quarter of a percentage point, following two previous cuts earlier in the year. While this move benefits borrowers, it presents challenges for savers. LendingTree is an online lending marketplace that connects borrowers with multiple lenders, allowing them to compare rates and terms for various financial products. WalletHub is a personal finance website that offers credit reports, credit scores, and financial education resources.
Credit card rates are now at their lowest since April 2023, though the average annual percentage rate (APR) on new card offers remains high at 23.96%. Financial experts advise consumers to use any relief from lower rates to accelerate debt repayment rather than accumulate new balances. The average household credit card balance is $10,951. A quarter-percentage-point cut will translate into an estimated $1.93 billion in savings on interest payments over the next year.
Mortgage rates are not expected to decrease in direct correlation with the latest rate cut, as they are influenced by U.S. Treasury yields and inflation expectations. However, mortgage rates are currently hovering near their lowest levels in over a year, averaging 6.32% for 30-year fixed loans. For savers, the average national savings account yield is just 0.61%, while high-yield savings accounts offer rates upwards of 4%. Financial advisors recommend considering longer-term certificates of deposit (CDs) and MYGAs for cash reserves not needed in the immediate future.
Analysts note that the rate cut is already factored into equity prices, but commentary from the Fed and upcoming economic data could still influence market movements. The lingering effects of a previous government shutdown continue to complicate assessments of inflation’s impact on the U.S. economy. Despite these uncertainties, some experts anticipate at least one more rate cut in 2026, maintaining a positive outlook on corporate earnings and long-term market growth.
