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The Federal Reserve left interest rates unchanged at the end of its two-day policy meeting.
The central bank has raised its benchmark borrowing rate 11 times since March 2022, the fastest pace of tightening since the early 1980s.
For consumers, it won’t get any less expensive to carry credit card debt, buy a house, purchase a car or tap into home equity.

The Federal Reserve left its target federal funds rate unchanged Wednesday, but did not signal an end to its aggressive rate hike campaign.
For households, that offers little relief from sky-high borrowing costs.

Altogether, Fed officials have raised rates 11 times in a year and a half, pushing the key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years. 
“I’m worried for the consumer,” said Tomas Philipson, University of Chicago economist and a former chair of the White House Council of Economic Advisers. “People are hit on both fronts — lower real wages and higher rates.”
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Since wage growth for many Americans hasn’t been able to keep pace with higher prices, those households are getting squeezed and are going into debt just when borrowing rates are spiking, Philipson said.
Real average hourly earnings fell 0.5% in August, while borrowers are paying more on credit cards, student loans and other types of debt.

“Borrowing is very expensive, period,” Philipson said.

What the federal funds rate means for you

The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.
Here’s a breakdown of how the central bank’s increases so far have affected consumers:

Credit cards

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rose, the prime rate did as well, and credit card rates followed suit.
Credit card annual percentage rates are now more than 20%, on average — an all-time high. Further, with most people feeling strained by higher prices, more cardholders carry debt from month to month.
For those who carry a balance, there’s not much relief in sight, according to Matt Schulz, chief credit analyst at LendingTree.
“Even though the Fed chose not to raise rates in September, the truth is that no one should expect credit card interest rates to stop rising anytime soon,” he said.
In the meantime, knocking down that debt “should absolutely be the goal,” he said.

Home loans

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rates for a 30-year, fixed-rate mortgage “remain anchored north of 7%,” said Sam Khater, Freddie Mac’s chief economist.
“The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated,” he said.

Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year after an initial fixed-rate period. But a HELOC rate adjusts right away. Already, the average rate for a HELOC is up to 9.12%, the highest in 22 years, according to Bankrate.
“That HELOC is no longer low-cost debt and it warrants a much higher focus on repayment than it has for a long time,” said Greg McBride, chief financial analyst at Bankrate.com.

Auto loans

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans.
The average rate on a five-year new car loan is now 7.46%, the highest in 15 years, according to Bankrate.
Experts say consumers with higher credit scores may be able to secure better loan terms or shop around for better deals. Car buyers could save an average of $5,198 by choosing the offer with the lowest APR over the one with the highest, according to a recent report from LendingTree. 

Student loans

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who take out new direct federal student loans are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
For those with existing debt, interest is now accruing again as of Sept. 1. In October, millions of borrowers will make their first student loan payment after a three-year pause.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Savings accounts

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.43%, on average, according to the Federal Deposit Insurance Corp.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are now paying over 5%, according to Bankrate, which is the most savers have been able to earn in more than 15 years.
Because the top online savings accounts are currently beating inflation, “money in a savings account is no longer a drag on your portfolio,” McBride said. And yet, only 22% of savers are earning 3% or more on their accounts, according to another Bankrate report.
“Boosting emergency savings is rewarded with returns exceeding 5%, if you’re putting the money in the right place,” McBride said.
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Life Changes

Unexpected life events may put a dent in your retirement savings, according to new research from Goldman Sachs.
Top financial advisors say consistently living below your means may help adjust for those shortfalls.

Thomas Barwick

Life goals and other financial priorities can get in the way of saving for retirement.
Over the long term, those competing priorities — dubbed the “financial vortex” — may reduce U.S. workers’ retirement savings by up to 37%, according to new research from Goldman Sachs Asset Management.

That’s even as more U.S. workers — 65% — say they are confident in their ability to meet their retirement savings goals, up from 57% last year, the firm’s July survey of 5,261 U.S. individuals found.
Yet even for the most diligent savers, life events can get in the way of retirement preparedness.
Having to retire earlier than expected at age 62 may reduce total retirement savings by 25%, Goldman Sachs’ research found.
Meanwhile, student loans may result in a 19% reduction in total retirement savings; caregiving may cause an 18% shortfall; early career cash outs pointed to a 16% decline; salary increases that didn’t coincide with proportional retirement savings increases resulted in a 13% reduction; and financial hardships resulted in a 5% decrease.

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Here’s a look at other stories offering a financial angle on important lifetime milestones.

For savers who experience multiple such events or factors, it’s “easy to see” how they may suffer a 37% decline in their retirement savings, Chris Cedar, senior retirement strategist at Goldman Sachs said during a presentation on the research.

“The reality for retirement savers is that they’re going to have to figure out how to balance some of these real-life impacts more than they’ve had to do so in the past,” Cedar said.

Living better now vs. living better later

With salary increases, the model forecasted for ongoing 3% adjustments as well as seven growth events over the course of a career. That includes 10% for early career increases and 6% for late career ones.
The potential for a shortfall even with those increases points to the challenge all workers face of accumulating wealth for retirement while also funding their lifestyles today.
“There’s a balance between living better now and living better later,” said John Merrill, president and founder of Tanglewood Total Wealth Management in Houston, which is No. 58 on the CNBC FA 100 list this year.
While events like a divorce, which Merrill calls a “financial wrecker,” may crop up unexpectedly even planned life milestones like the birth of a child can increase financial pressure.
“The main thing is discipline,” Merrill said. “People who are disciplined with their money, disciplined with their life, really are going to go so much further.”
The best approach is to pay yourself first — including at least 10% of your salary toward retirement and 5% toward an emergency fund — and then spend the rest, he said.
Other experts caution that increasing overall spending as salary and wealth goes up, known as lifestyle creep, should be avoided.

Having a higher-cost lifestyle creates two problems, according to Stephen Cohn, a certified financial planner and co-president of Sage Financial Group in West Conshohocken, Pennsylvania, which is No. 22 on the CNBC FA 100 list.
First, it makes it more difficult to save for long-term goals including retirement. Then at retirement, savers may find their nest egg falls short of their needs while they’re challenged with making up the income they need to sustain their lifestyle.

Retirement age uncertainty

Some people may be willing to forgo having more saved toward retirement in favor of other nearer-term goals.
“There are people who say, ‘Me putting my children through college is more important to me than retiring at age 65,'” Cohn said.
Yet Goldman Sachs’ research points to many savers not having control of when they will retire.
The firm found that 21% of respondents said they believe they will have to delay retirement by four or more years due to the competing financial pressures they face, which may include credit card debt, saving for college and providing support to family members.
Yet among retirees, 50% retired earlier than expected, Goldman Sachs found.
Some individuals reach age 60 and are worn out and want to retire but unfortunately haven’t saved enough to make it work, noted Patrick McGinn, president of Retirement Resources Investment Corp. in Peabody, Massachusetts, which is No. 29 on the CNBC FA 100 list.
They may be faced with reduced Social Security benefits for claiming early. Plus, they also have to figure out how to cover their health care between age 62 and the Medicare eligibility age of 65, McGinn noted.
“Combined, it really makes that math very challenging,” he said.
The best way to prepare, he said, is to focus on the things you can control and try to find balance in your current lifestyle.
“Try to live below your means pretty consistently and that should result generally in a pretty good success rate,” McGinn said. More

The IRS on Monday said it will “substantially” reduce the number of so-called correspondence audits for filers claiming the earned income tax credit, a tax break for low- to moderate-income filers.
It’s part of the agency’s broader effort to fix inequity in enforcement, with a focus on auditing higher earners, partnerships and large corporations.  
The IRS aims to curb earned income tax credit audits by helping taxpayers file more accurate returns upfront.

IRS Commissioner Daniel Werfel testifies before the House Small Business Committee on July 17, 2013.
James Lawler Duggan | Reuters

They’re using resources to reverse the precipitous decline in enforcement at the top.

Chuck Marr
Vice president for federal tax policy at the Center on Budget and Policy Priorities

Only 2% of Americans earning more than $5 million a year faced an audit in 2019, down from 16% in 2010, according to a report from the Government Accountability Office.
The IRS in May said that Black Americans are significantly more likely to face an audit, confirming earlier findings from economists from Stanford University, the University of Michigan, the U.S. Department of the Treasury and the University of Chicago.

Findings show the earned income tax credit has contributed to this disparity and the IRS has been weighing policy changes to address the issue.
The IRS aims to curb correspondence audits for the earned income tax credit by helping taxpayers file more accurate returns upfront, which will “increase payment accuracy while reducing administrative burdens for the IRS and the tax filer,” according to the letter.
However, experts are still waiting for details about how these policy changes will be implemented.

Scrutiny of the earned income tax credit

Generally, refundable tax credits, such as the earned income tax credit, face more scrutiny because filers can still receive a refund without taxes owed.
More than 26 million low- and middle-income taxpayers received the earned income tax credit during tax year 2019, according to the National Taxpayer Advocate’s 2022 annual report to Congress. However, during fiscal year 2020, over $16 billion of the credit was improperly claimed, according to the report.
The reason for errors is the tax break’s complexity, which requires claimants to work and have a qualifying child, according to Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center.
“Defining care is a challenge,” she said.
For example, a child can have multiple caretakers throughout the year and it can be difficult to match the credit with the right caretaker. More

Most borrowers haven’t made a payment on their education debt since Donald Trump was president and the coronavirus was just starting to spark concern.
But the pandemic-era relief policy will conclude in October.

Woman going over her finances
Damircudic | E+ | Getty Images

1. There’s wiggle room for those struggling

Consumer advocates say many borrowers are likely to struggle readjusting to student loan payments.

“Even if the risk from the virus has diminished, the financial fallout has not,” Persis Yu, deputy executive director at the Student Borrower Protection Center, previously told CNBC.
The Consumer Financial Protection Bureau has also warned that roughly 1 in 5 student loan borrowers have risk factors that could lead them to face difficulties meeting their bills.
To combat these concerns, the Biden administration is implementing a 12-month “on ramp” to repayment, during which borrowers will be shielded from the worst consequences of falling behind.
Specifically, for a year, borrowers’ late payments shouldn’t be reported to the credit bureaus and they will not face the normal collection activity, including wage and retirement benefit garnishments, said higher education expert Mark Kantrowitz.

2. Your student loan servicer may have changed

Several of the lenders that manage federal student loans for the government — including Navient, the Pennsylvania Higher Education Assistance Agency (also known as FedLoan) and Granite State — stopped doing so during the pandemic-era pause.
As many as 4 in 10 student loan borrowers will be transferred to a different company by the fall, according to the CFPB.
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Those who were serviced by Granite State will now be with EdFinancial Services, said Kantrowitz, who has been tracking the changes. Accounts with Great Lakes Higher Education should be managed by Nelnet going forward, and Navient’s borrowers will be moved to Maximus Federal Services/Aidvantage.
Borrowers can check to see if they have a new servicer at StudentAid.gov.
Meanwhile, borrowers shouldn’t have to do much during the servicer swap, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.
Some will need to create an updated online account with their new company. “But the communications they received would have told them if they needed to take that step,” he said.

Even if the risk from the virus has diminished, the financial fallout has not.

deputy executive director at the Student Borrower Protection Center

If you were enrolled in automatic payments with your servicer, which usually leads to a small discount on your interest rate, you may need to reenroll, Kantrowitz said.
You’ll also want to make sure your new servicer has your latest contact information, he said, as these details might have changed during the Covid pandemic.

3. Your payment amount could be different

If you are enrolled in the same repayment plan as you were in before the pause went into effect, your monthly bill may not change, Kantrowitz said. The average payment is about $350 a month.
However, if you are signed up for an income-driven repayment plan, your monthly bill could be different if your income is lower or higher than it was in March 2020. IDR plans cap your payment at a share of your discretionary earnings.
Also: if you signed up for the Biden administration’s new SAVE plan, your monthly payment should be lower, at least in time. That plan cuts people’s obligation to just 5% of discretionary income, the smallest amount to date. (Some of the program’s benefits will be in effect by the time payments restart, but others will only kick in next summer, due to the timeline of regulatory changes.)
To determine how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org More

Older federal student loan debtors who fall behind on payments may be at risk of having their Social Security checks garnished.
A bill that has been reintroduced in Congress seeks to protect Social Security benefits from being reduced in those circumstances.
Borrowers who rely on these federal benefits may still seek other relief.

Jose Miguel Sanchez | Istock | Getty Images

Federal student loan repayment is set to restart in October following a pandemic hiatus that has been in place since March 2020.
Millions of Americans will be on the hook to make monthly payments on those debts, including some Social Security beneficiaries. But if those debtors fall behind on their federal student loans, that may eventually put a portion of the income they receive from Social Security benefits at risk.

However, new protections put in place under President Joe Biden as payments restart will delay any garnishments from happening.
“The earliest I can see someone getting their Social Security garnished would be late fall of 2024,” said Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, a provider of student loan advice and dispute resolution.
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Last week, a group of Democratic Congressional lawmakers sought to get ahead of the issue and reintroduced a bill to prevent the federal government from garnishing Social Security benefits from debtors who fall behind to repay student loans or other non-tax federal debts.
The Protection of Social Security Benefits Restoration Act was introduced in the House by Reps. John Larson, D-Conn., and Raul Grijalva, D-Ariz., and in the Senate by Sen. Ron Wyden, D-Oregon.

“Social Security is an earned benefit Americans have paid into their entire working lives, and garnishing these already-modest benefits to recover student loan debt hurts their ability to retire with dignity,” Larson said in a statement.
The reduction in annual Social Security benefits from such garnishments can be about $2,500 on average, the Center for Retirement Research at Boston College has estimated based on 2019 data. That represents about 4% to 6% of household income, which may instead be used to cover other expenses, according to the Center for Retirement Research.

Student debt held by older Americans rises

The number of Social Security beneficiaries who had a portion of their Social Security benefits taken by the government for student loan repayment increased by more than five times between 2002 and 2016, according to a 2016 Government Accountability Office report. At least 114,000 beneficiaries saw their Social Security checks garnished when they fell behind on student loan repayments, according to the research.
“The amount of student debt held by older adults has gone up dramatically in the past 15 years or so,” said Kate Lang, director of federal income security at Justice in Aging, an organization devoted to fighting senior poverty.
One effort to alleviate that debt burden, the promise of up to $20,000 in federal student loan forgiveness, fell through in June when the Supreme Court struck down President Joe Biden’s plan. The administration has provided other targeted debt forgiveness, and has said it plans to pursue additional forgiveness of federal student loan balances where possible.
The Biden administration has unveiled new plans to help alleviate student loan borrowers’ financial burdens as they begin repayment on their federal debts.
A 12-month “on ramp” will exempt borrowers from the worst consequences of missed, late or partial payments. For debtors with defaulted federal loans, a one-time temporary program, called Fresh Start, will provide special benefits and help them get out of default.

The amount of student debt held by older adults has gone up dramatically in the past 15 years or so.

director of federal income security at Justice in Aging

“Anybody who is in default now that is worried about their Social Security or even just regular wages being garnished should take advantage of the Fresh Start program,” Mayotte said.
Not only does the program eliminate the risk of garnishment for its duration, but it also puts the borrower back in good standing so they can take advantage of income-driven repayment plans, Mayotte noted.
In addition, the Biden administration has also unveiled a new income-driven repayment plan that cuts borrowers’ obligation to just 5% of discretionary income. That may cut many enrollees’ previous monthly payments in half, and will leave some with no monthly bill.
That plan may be able to help older borrowers reduce their monthly payments. “We’re hopeful about that process,” Lang said.
Nevertheless, for older debtors, restarting federal student loan debt payments may be a struggle.
“We’re very concerned about what’s going to happen next month once collections starts up again,” she said.

Justice in Aging has endorsed the legislative proposal to prevent Social Security checks from garnishment, which may help provide additional protections, according to Lang. Yet this kind of bill has been proposed in the past and not made it into law, she said.
Social Security beneficiaries who have their benefits garnished are guaranteed at least $750 per month in benefits, Lang noted. But that threshold has not been adjusted for inflation since it was established in the 1990s, which means affected beneficiaries face a greater risk of being pushed into poverty.
Some Social Security beneficiaries may qualify to have their loans discharged if they have a total and permanent disability, according to Lang. Notably, this does not require having to meet the Social Security Administration’s definition of a disability. Instead, the process requires the debtor have their doctor fill out a form indicating their physical condition prevents them from working.
“That’s an opportunity that a lot of older adults don’t know about,” Lang said, particularly if they don’t think of themselves as a person with a disability who may be eligible for that kind of discharge. More

These days, fewer Americans, including millionaires, feel confident about their financial standing.
But there are certain money moves wealthy Americans are more likely to make to improve their long-term well-being.
Here are some of the habits of millionaires that help in times of economic uncertainty.

Svyatoslav Balan | Getty

Almost regardless of how much you have in the bank, it’s hard to feel financially secure.
Across the board, households are facing surging child-care costs, ballooning auto loans, high mortgage rates and record rents amid economic uncertainty and recessionary fears.

Of those with more than $1 million in investable assets, as many as one third — or 33% — fear they could outlive their savings, according to Northwestern Mutual’s 2023 Planning and Progress Study.
And nearly half, or 47%, of wealthy Americans said their financial planning needs improvement.
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Despite their high net worth, less than half of all millionaires, or 44%, felt “very comfortable,” a separate report by Edelman Financial Engines found.
Even doctors, lawyers and other highly paid professionals — also referred to as the “regular rich” — who benefit from stable jobs, homeownership and a well-padded retirement savings account said they don’t feel well off at all. Some even said they feel poor, according to another recent survey conducted by Bloomberg.

Yet there are things millionaires do that the rest of us may not, Northwestern Mutual’s report also found, which can go a long way toward improving long-term well-being.
Here are three moves wealthy Americans are more likely to make:

1. Planning for ups and downs

“Wealthy people hold themselves to an exceptionally high standard when it comes to managing their finances,” said Aditi Javeri Gokhale, chief strategy officer and head of institutional investments at Northwestern Mutual.
In fact, 84% of the wealthiest Americans said they have a long-term financial plan that accounts for economic ups and downs, Northwestern Mutual found. Only 52% of the general population said the same.

“They don’t go on autopilot. Instead, they aim to see well beyond today,” Gokhale said. “That includes the possibility of twists and turns in their financial lives.”
Maintaining a well-diversified portfolio has never been more important, experts say, including stocks and high-quality bonds, which have historically performed well during a downturn.  

2. Working with an advisor

To come up with a plan based on risk tolerance and goals, millionaires are also much more likely to seek professional help.
Seven out of 10 wealthy Americans work with a financial advisor, nearly double the amount of the mainstream population, Northwestern Mutual found.

“When you work with an advisor you get this opportunity to have an agent — very akin to a therapist,” said Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York.
“When life events come up, like the birth of a child or job change, having that third party can help you focus on what you can control and making smart decisions,” he said. Boneparth is also a member of CNBC’s Advisor Council.

3. Staying committed to a financial plan

It follows that “financial planning leads to more disciplined money management,” Boneparth said.
Roughly 42% of millionaires consider themselves “highly disciplined” when it comes to their financial goals and how they plan to reach them; among all Americans, only 1 in 5 said the same.
In most cases, being disciplined means a commitment to save more than you spend, invest regularly, stay diversified and keep emotions in check.
“This financial planning tool is what gives us a road map of what we need to do to accomplish our goals,” Boneparth said. “Without those plans we are shooting from the hip and that’s not great.”
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As the IRS pauses on processing new claims for the employee retention tax credit, or ERC, some small businesses are in limbo.
The agency is working on further guidance on how to withdraw unprocessed ERC claims, along with a settlement program for small businesses who wrongly received the credit and want to pay it back.

IRS Commissioner Daniel Werfel testifies before a Senate Finance Committee hearing on Feb. 15, 2023.
Kevin Lamarque | Reuters

As the IRS pauses on processing new claims for a pandemic-era small business tax break, some filers are in limbo as the agency works on further guidance.
The IRS on Thursday temporarily halted processing for amended payroll tax returns claiming the so-called employee retention tax credit, or ERC, which was enacted during the Covid-19 pandemic.

Worth thousands per eligible employee, the IRS said the program has triggered a flood of “questionable claims,” as a cottage industry of specialist firms has popped up and pressured small businesses to wrongly claim the tax relief.
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“Businesses that receive ERC payments improperly face the daunting prospect of paying those back, so we urge the utmost caution,” IRS Commissioner Danny Werfel said on Thursday, urging small businesses to review claims with a qualified tax professional.
In the meantime, the IRS is working on further guidance on how to withdraw unprocessed ERC claims, along with a settlement program for small businesses who wrongly received the credit and want to pay it back.

‘There’s no need to panic’

While affected small businesses may be concerned, “there’s no need to panic here,” said Jennifer Rohen, a principal at CliftonLarsonAllen with expertise in claiming the ERC.

If you claimed the credit and are worried about eligibility, it’s an excellent time to review your filing with a qualified tax professional, she said.
The IRS has released a detailed ERC eligibility checklist to assist filers. The credit was designed for small businesses and tax-exempt organizations that paid employees during government-mandated shutdowns or experienced a “significant decline in gross receipts” during certain periods in 2020 and 2021.

My blanket advice is always to talk to a qualified tax professional who has filed [ERC claims] before.

Craig Hausz
CEO and managing partner at CMH Advisors

“My blanket advice is always to talk to a qualified tax professional who has filed [ERC claims] before,” said certified financial planner Craig Hausz, CEO and managing partner at CMH Advisors in Dallas. He is also a certified public accountant. 
If you received the credit and know you don’t qualify, Hausz said you should start the process of paying the money back. “I think the IRS is going to be a lot more lenient on abating penalties and interest if someone proactively sends money back,” he added.

There’s still time for a ‘valid claim’

While the deadline for 2020 amended returns is approaching, there’s still time for legitimate ERC claims, said Kristin Esposito, director for tax policy and advocacy for the American Institute of CPAs. Small businesses have until the tax deadline in 2024 to amend 2020 returns.
“If you have a valid claim, I would still go through the calculation and have all your documentation ready,” she said. “But if it seems too good to be true, it usually is.”
New ERC claims won’t be processed until 2024 at the earliest and filers may not receive the credit until the spring or summer, according to Hausz. More

The Federal Reserve is expected skip an interest rate hike at the end of its two-day meeting this week.
Consumers will still feel the effects of higher rates and persistent inflation.
Here’s a breakdown of how the Fed impacts your monthly expenses and savings.

Artistgndphotography | E+ | Getty Images

The Federal Reserve is likely to skip an interest rate hike when it meets this week, experts predict. But consumers may not feel any relief.
The central bank has already raised interest rates 11 times since last year — the fastest pace of tightening since the early 1980s.

Yet recent data is still painting a mixed picture of where the economy stands. Overall growth is holding steady as consumers continue to spend, but the labor market is beginning to loosen from historically tight conditions.
At the same time, inflation has shown some signs of cooling even though it remains well above the central bank’s 2% target.
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Even with a break in rate hikes, “the one thing that remains very clear is that the Fed is nowhere close to cutting rates,” said Greg McBride, chief financial analyst at Bankrate.com. “Rates remain really high and will stay there for a while.”
The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

Here’s a breakdown of how the impact has already been felt:

Credit card rates top 20%

Most credit cards come with a variable rate, which has a direct connection to the Fed’s benchmark rate.
After the previous rate hikes, the average credit card rate is now more than 20% — an all-time high, while balances are higher and nearly half of credit card holders carry the debt from month to month, according to an earlier Bankrate report.

Mortgage rates are above 7%

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rates for a 30-year, fixed-rate mortgage “remain anchored north of 7%,” said Sam Khater, Freddie Mac’s chief economist. “The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated.”

Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rose, the prime rate did, as well, and these rates followed suit.
Now, the average rate for a HELOC is up to 9.12%, the highest in 22 years, according to Bankrate. “That HELOC is no longer low-cost debt and it warrants a much higher focus on repayment than it has for a long time,” McBride said.

Auto loan rates top 7%

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans.
The average rate on a five-year new car loan is now 7.46%, the highest in 15 years, according to Bankrate.
Experts say consumers with higher credit scores may be able to secure better loan terms or shop around for better deals. Car buyers could save an average of $5,198 by choosing the offer with the lowest APR over the one with the highest, according to a recent report from LendingTree. 

Federal student loans are now at 5.5%

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who take out new direct federal student loans are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
For those with existing debt, interest is now accruing again as of Sept. 1. In October, millions of borrowers will make their first student loan payment after a three-year pause.

Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Deposit rates at some banks are up to 5%

While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.43%, on average, according to the Federal Deposit Insurance Corporation, or FDIC.
Average rates have risen significantly in the last year, but they are still very low compared to online rates, according to Ken Tumin, founder of DepositAccounts.com.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are now paying over 5%, according to Bankrate, which is the most savers have been able to earn in more than 15 years.
However, if the Fed skips a rate hike at its September meeting, then those deposit rate increases are likely to slow, Tumin said.
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