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Despite escalating political pressure from President Donald Trump, the Federal Reserve is widely expected to hold its benchmark short-term borrowing rate steady at its meeting next week.
All sorts of consumer borrowing costs are impacted by the what the central bank decides.
From mortgage rates and auto loans to credit cards and savings accounts, here’s a look at how the Fed affects your finances.

Ahead of next week’s Federal Reserve meeting, relations between President Donald Trump and Fed Chair Jerome Powell have hit a low.
“Families are being hurt because Interest Rates are too high,” Trump wrote in a Truth Social post on Wednesday.

Trump has said he wants the Fed to sharply lower interest rates by as much as 3 percentage points to spur economic growth. (Although the central bank typically adjusts its benchmark in 25-basis-point increments, rates were slashed to near zero as recently as the Covid pandemic. “The Fed only resorts to such extreme measures in response to severe economic distress,” said Greg McBride, chief financial analyst at Bankrate.)
The president has argued that maintaining a federal funds rate that is too high makes it harder for businesses and consumers to borrow and puts the U.S. at an economic disadvantage to countries with lower rates.
The Fed’s benchmark sets what banks charge each other for overnight lending, but also has a trickle-down effect on almost all of the borrowing and savings rates Americans see every day.
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Powell said earlier this month that the Fed likely would have cut rates by now, but that it has held off due to the uncertainty and inflation risks posed by Trump’s tariff agenda. Many economists say that the full impact from tariffs on pricing has only just started to be felt, and inflation could pick up in the second half of the year.

Since December, the federal funds rate has remained steady in a target range of 4.25% to 4.5%. Futures market pricing is implying almost no chance of an interest rate cut when the Fed meets next week, according to the CME Group’s FedWatch gauge. Market pricing indicates the Fed is much more likely to consider a rate cut in September.
Once the fed funds rate comes down, consumers could see their borrowing costs start to fall as well.
However, “there is no guarantee this would translate into lower rates,” said Brett House, an economics professor at Columbia Business School — “largely because many types of borrowing, mortgage rates specifically, are not benchmarked off the Fed.”
From mortgage rates and auto loans to credit cards and savings accounts, here’s a look at how the Fed affects your finances.

Mortgages

Trump said in a July 23 social media post that “Housing in our Country is lagging because Jerome ‘Too Late’ Powell refuses to lower Interest Rates.”
But fixed mortgage rates, specifically, don’t directly track the Fed: They are largely tied to Treasury yields and the U.S. economy. As concerns over tariffs and the broader economy drive Treasury yields higher, mortgage rates also remain stubbornly high.

The average rate for a 30-year, fixed-rate mortgage is currently near 6.8%, according to Bankrate. The nationwide problem of limited inventory and housing affordability is a key issue, regardless of the Fed’s next move.
The housing market “continues to struggle under high home prices as well as high mortgage rates,” Eugenio Aleman, chief economist at Raymond James, said in a statement. The median price of a home sold hit a record high in June, according to recent data.

Credit cards

Most credit cards have a variable rate, so there’s a more direct connection to the Fed’s benchmark.
Yet, regardless of the central bank’s next move, credit card rates are high and likely to stay there. The average annual percentage rate is currently just over 20%, according to Bankrate, not far from last year’s all-time record. 

“Credit card rates have been in a holding pattern at a very elevated level,” McBride said.
Even if APRs were 3 percentage points lower, that would not significantly ease the burden of a revolving balance, most experts say.

Auto loans

Auto loan rates are fixed for the life of the loan. Payments keep getting bigger because car prices are rising, in addition to pressure from Trump’s plan to impose higher tariffs on foreign-made vehicles and car parts.
Currently, the average rate on a five-year new car loan is 7.22%, according to Bankrate.
“Consumers are continuously stretching to afford new vehicles in this market,” said Ivan Drury, Edmunds’ director of insights. Now, the share of new-car buyers with a car payment of more than $1,000 a month is at all-time high.

Student loans

Savings

On the upside, top-yielding online savings accounts still offer above-average returns and currently pay more than 4%, according to Bankrate.
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 — so holding that rate unchanged has kept savings rates above the rate of inflation, which is considered a rare win.
“It’s not a good time to be a borrower, but it’s a great time to be a saver — lean into that,” said Bankrate’s McBride.
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President Donald Trump this week said the administration is “thinking about” ending capital gains taxes on home sales to bolster the housing market.
The proposal would require approval from Congress, and it’s unclear whether the measure has broad support.
However, there are other ways to reduce capital gains taxes after a home sale, financial experts say.

Martin Barraud | Ojo Images | Getty Images

As President Donald Trump weighs ending capital gains taxes on home sales to bolster the housing market, experts say it’s possible to lower your bill without legislative changes.
When asked about the idea this week in the Oval Office, Trump told reporters, “we’re thinking about that.”

Under current law, you can trigger capital gains taxes for a primary home sale if your profit exceeds $250,000 for single filers or $500,000 for married couples filing together.
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If your home sale profit is above $250,000 or $500,000, you pay capital gains tax of 0%, 15% or 20%, depending on your taxable income. (You calculate taxable income by subtracting the greater of the standard deduction or itemized deductions from adjusted gross income.)
Some higher earners also owe a 3.8% surcharge, known as net investment income tax, on home sales profits above the thresholds.

Who pays capital gains taxes on home sales

While home prices have soared over the past couple of decades, most sellers are under the $250,000 or $500,000 profit thresholds, experts say.

Those impacted are typically “older homeowners, people who have been in their house for many, many years,” said William McBride, chief economist at the Tax Foundation. 

Roughly 34% of homeowners could exceed the $250,000 threshold for single filers, and 10% could be above the $500,000 limit for married couples filing jointly, according to a 2025 study from the National Association of Realtors, which has advocated for capital gains reform for home sales.
If you’re planning to sell your home and expect profits above the thresholds, here are some ways to lower your capital gains tax bill, experts say.

Reduce your home’s ‘cost basis’

Many home sellers don’t know they can trim capital gains by increasing their “cost basis,” or the home’s original purchase price, according to Boston-area certified financial planner Catherine Valega, founder of Green Bee Advisory. She’s also an enrolled agent, which is a tax license to practice before the IRS.
You can increase your basis by adding “capital improvements,” such as renovations that “improve the resale value of your home,” she said.  
Some examples of these updates include room additions, landscaping, or adding new systems, according to the IRS.

However, capital improvements do not include repairs and maintenance that are “necessary to keep your home in good condition,” such as repainting, fixing leaks or replacing broken hardware, the agency said.
Regardless of whether the law changes, you should keep records of your home’s capital improvements, which could help lower taxes when you sell, Valega said. More

Actress Sydney Sweeney helped bring clothing retailer American Eagle’s shares into the current meme stock mania.
American Eagle’s high short interest and inherent brand recognition make it a prime candidate for meme-obsessed retail traders.
Sweeney will lead a campaign for the company centering on denim jeans.

Sydney Sweeney attends the 10th Annual LACMA ART+FILM GALA at the Los Angeles County Museum of Art on November 06, 2021 in Los Angeles, California.
Presley Ann | Getty Images Entertainment | Getty Images

Actress Sydney Sweeney helped bring American Eagle shares into the latest round of meme stock mania on Thursday.
The “Euphoria” and “Anybody But You” star will headline a fall campaign for the clothing retailer, American Eagle announced Wednesday. Shares of the company surged more than 12% in Thursday premarket trading.

Stock chart icon

American Eagle, 1-day

Thursday’s jump makes American Eagle poised to join the ranks of a new class of meme stocks that has emerged this week. American Eagle’s high short interest and inherent brand recognition make it a prime candidate for meme-obsessed individual investors, who have been sending specific stocks on volatile rides in recent days.
GoPro and Krispy Kreme came into the fold after the pair saw wild trading in Wednesday’s session. Earlier in the week, meme traders had focused attention on Opendoor Technologies and Kohl’s.
More than 13% of American Eagle shares available for trading are sold short, according to FactSet data. The stock generated discussion among users on the Wall Street Bets Reddit page, a popular forum for retail investors, beginning Wednesday night. As investors betting against the stock move to cover their hefty short position, it can fuel some artificial buying in the shares.
Sweeney’s campaign will center on American Eagle’s denim jeans, according to the company. That comes as retailers lean into the growing preference for the fabric amid a boom in popularity for Western styles.
“With Sydney Sweeney front and center, she brings the allure,” Jennifer Foyle, the company’s president and executive creative director, said in a statement. “We add the flawless wardrobe for the winning combo of ease, attitude and a little mischief.”
Thursday’s action can provide a reprieve for the battered stock, whose shares have tumbled around 35% so far in 2025 through Wednesday’s close. More

Most Americans say Social Security is important, regardless of their age or political affiliation, according to a new survey from AARP.
Yet confidence in the program’s future has declined in the past five years, the survey finds.
Here’s what Americans should know, but often get wrong, about the program.

Alistair Berg | Digitalvision | Getty Images

A majority of Americans — 74% — say they are somewhat to very informed about how Social Security works, according to a new survey from AARP. Yet the results show they could stand to know more about certain program features.
Almost all respondents, 96%, say Social Security is important, regardless of their age or political affiliation.

Even with Social Security’s popularity, confidence in the future of the program has dropped 7 percentage points in the past five years — to 36% in 2025 down from 43% in 2020, AARP found.
Social Security provides monthly benefit checks to more than 70 million Americans, including retirees, disabled individuals and families. The program, which was created with legislation that President Franklin Delano Roosevelt signed into law on August 14, 1935, is now approaching its 90th anniversary.
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More than three-quarters of AARP survey respondents — 78% — worry Social Security won’t provide enough to live on in retirement.
Meanwhile, the number of people collecting Social Security is expected to grow to 82 million by 2035, AARP CEO Myechia Minter-Jordan said during a press call on Tuesday.

“We can’t afford for politicians to play games with the future of Social Security, and we’ll fight as hard and as long as we need to ensure that Social Security remains the economic bedrock of retirement for generations to come,” Minter-Jordan said.
Here are two key areas of the program that Americans tend to misunderstand:

1. Most don’t understand trust fund depletion dates

A Social Security Administration office in Washington, D.C., March 26, 2025.
Saul Loeb | Afp | Getty Images

Every year, new estimates are released regarding the longevity of the Social Security trust funds that the program relies on to help pay benefits.
Earlier this year, Social Security’s trustees projected the program’s combined trust funds will last until 2034. At that time, 81% of scheduled benefits would still be payable, as payroll tax contributions into the program continue.
Yet the AARP survey found 47% of respondents wrongly believe that retirement benefits would be cut by at least half when the trust funds are depleted, rather than by the estimated 19% cut the trustees currently project.
Separately, just 34% of respondents to the survey correctly said Social Security benefits will be paid at a reduced level once the trust funds are exhausted.

2. Many don’t know ages to claim retirement benefits

When it comes to claiming Social Security, eligible individuals may choose to start their monthly retirement checks as early as age 62 or delay for increased benefits until up to age 70.
But there is a drastic difference in the dollar amount of payments beneficiaries may receive depending on their start date.
At full retirement age — typically ages 66 to 67 depending on date of birth — retirees may receive 100% of the benefits they’ve earned. Retirees take a permanent reduction in benefits for claiming earlier than that.
For a beneficiary eligible for a $1,000 benefit at age 67, claiming at 62 would reduce monthly benefits by 30%, or down to $700 per month, according to the Social Security Administration.

Prospective beneficiaries who wait even longer stand to receive an 8% benefit boost for every year they delay up to age 70.
Yet the AARP survey found that many individuals are unaware of how claiming ages could affect their benefits. The results showed 41% didn’t know the earliest claiming age, while 66% did not know the age to maximize benefits.

Younger Americans are less confident in benefits

Damircudic | Getty Images

While Social Security is popular among Americans, confidence in the program is “tempered,” according to AARP’s research.
Younger Americans tend to have lower confidence in Social Security, with Americans in their 30s being the most pessimistic, the survey found.
“Some of this could be that younger people just haven’t experienced Social Security yet and don’t understand how the program works,” said Bill Sweeney, senior vice president of government affairs at AARP.  “Actually receiving Social Security changes how people view the program.” More

President Donald Trump on Tuesday said the administration is considering ending capital gains taxes on home sales.
Under current law, home sellers can face capital gains taxes once profits exceed $250,000 for single filers or $500,000 for married couples filing jointly.
Since 1997, those thresholds have never been indexed for inflation, and more home sellers are subject to capital gains as property values rise.

U.S. President Donald Trump meets with Philippine President Ferdinand Marcos Jr. (not pictured), in the Oval Office at the White House in Washington, D.C., U.S., July 22, 2025.
Kent Nishimura | Reuters

President Donald Trump said the administration is considering ending capital gains taxes on home sales to boost the housing market.
When asked about the idea in the Oval Office on Tuesday, Trump told reporters, “we’re thinking about that.”

“If the Fed would lower the [interest] rates, we wouldn’t even have to do that,” he said. “But we are thinking about no tax on capital gains on houses.”
Under current law, home sellers can face capital gains taxes once profits exceed $250,000 for single filers or $500,000 for married couples filing jointly.
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Trump’s comments come roughly two weeks after Rep. Marjorie Taylor Greene, R-Ga., introduced the No Tax on Home Sales Act, to eliminate capital gains taxes on primary home sales.
“Homeowners who have lived in their homes for decades, especially seniors in places where values have surged, shouldn’t be forced to stay put because of an IRS penalty,” she said in a statement. “My bill unlocks that equity, helps fix the housing shortage, and supports long-term financial security for American families.”

However, the proposal could be costly, and it’s unclear whether the measure has broad congressional support, experts say.
“I think this could generate some interest, but they’re more likely to raise the exemption than they are to eliminate the tax entirely,” Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, told CNBC.

Who pays capital gains on home sales

Enacted in 1997, the $250,000 and $500,000 capital gains exclusions — which apply to primary home sales — have never been indexed for inflation.
Since 1997, the median home sales price has climbed by nearly 190%, from about $145,000 to roughly $417,000, as of the first quarter of 2025, according to Federal Reserve data.
As home values rise, certain individuals, such as longtime homeowners, are more likely to exceed the $250,000 and $500,000 thresholds, which could trigger capital gains taxes, experts say.

When home sales profits exceed $250,000 or $500,000, capital gains are levied at 0%, 15% or 20%, depending on taxable income. Excess profit above those thresholds can also trigger the so-called net investment income tax of 3.8%, depending on other investment earnings, according to the IRS.
Some 29 million homeowners (34%) could exceed the $250,000 threshold for single filers, and 8 million (10%) could be above the $500,000 limit for married couples filing jointly, according to a 2025 study from the National Association of Realtors, or NAR. The organization has long advocated for capital gains reform for home sales.
Homeowners in states like Washington, California, Utah and Massachusetts are more likely to be impacted, according to NAR data.

However, many homeowners don’t realize it’s possible to reduce your home sales profit by adding so-called capital improvements, such as home renovations to the original purchase price, experts say.
If capital gains taxes for home sales were eliminated, the measure would primarily benefit sellers who are older and wealthier, according to an analysis released Tuesday from The Budget Lab at Yale University. More

Student loan forgiveness is on hold for borrowers enrolled in the Income-Based Repayment plan while the Education Department responds to court orders.
IBR will soon be one of only a few repayment options left to millions of borrowers, after recent court actions and President Donald Trump’s “big beautiful bill.”
Here’s what to know about the delay in debt relief for IBR borrowers.

Workers leave the Department of Education building during a rain shower in Washington, D.C., on Wednesday, May 21, 2025.
Wesley Lapointe | The Washington Post | Getty Images

Education Dept. says it’s responding to court order

Student loan forgiveness is paused for IBR borrowers because of court actions involving the Biden administration-era SAVE, or Saving on a Valuable Education, plan, the department said.
Former President Joe Biden touted SAVE as the most affordable income-driven repayment plan in history, but its generous terms soon became a point of controversy for Republicans.
In February, the 8th U.S. Circuit Court of Appeals sided with GOP-led states that sued to block the SAVE plan rule, which had sweeping impacts on student loan repayment. For example, under the rule, certain periods during which borrowers postponed their payments would count toward their forgiveness timeline. With SAVE blocked, borrowers no longer get credit during those forbearances.
“So the U.S. Department of Education will need to make changes to the qualifying payment counts,” said higher education expert Mark Kantrowitz.
Ellen Keast, deputy press secretary at the Education Department, said IBR discharges would resume “as soon as the Department is able to establish the correct payment count.”

How to stay on track for student loan forgiveness

The hold on IBR discharges shouldn’t impact student loan borrowers who are still years away from debt forgiveness, experts said. However, they may not receive credit for any periods during which their bills were paused.
If you’re pursuing debt erasure under IBR, your payments made under the plan (or another income-driven repayment plan) will still be bringing you closer to debt cancellation, as long as you are enrolled in IBR when you become entitled to that relief.

If you expected your debt to be forgiven shortly, you should continue making payments, Kantrowitz said. You don’t want to be flagged as late.
“Any excess payments will be refunded,” Kantrowitz said.

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Some key back-to-school essentials such as backpacks cost more this year due to a recent uptick in inflation.
Concerns that potential tariffs could drive prices even higher are forcing many parents to find strategic ways to save.

Back-to-school shopping is a little more stressful this year.
With inflation picking up, and President Donald Trump’s new tariff rates threatening to drive prices even higher, some parents are worried about making ends meet.

Roughly 20% of back-to-school shoppers said buying supplies for the new year is straining their budgets, according to a new report by Bankrate, which polled more than 2,600 adults in June.
A separate report, by Intuit Credit Karma, found that 39% of parents said they can’t afford back-to-school shopping this year. Meanwhile, 44% said they plan to take on debt to cover the cost of school supplies, up from 34% in 2024. 
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Families are now paying more for some key back-to-school essentials, such as backpacks, ahead of the new school year. CNBC used the producer price index — a closely followed measure of inflation — to track how the costs of manufacturing certain items that students need changed between 2019 and 2025.

Families with children in elementary through high school plan to spend an average of $858.07 on school supplies, down slightly from $874.68 last year, according to the National Retail Federation.

Altogether, this year’s back-to-school spending, not including for college students, is expected to hit $39.4 billion, the NRF also found.
According to another 2025 back-to-school retail survey, by Deloitte, back-to-school spending for K-12 students is estimated to reach a collective $30.9 billion, or an average of roughly $570 per child this year. However, that is also down from $586 in 2024, even with higher prices across categories. Deloitte polled more than 1,200 parents in May.

Tariffs weigh on household budgets

Trump’s initial “liberation day” tariff agenda — which set a 10% baseline levy for nearly all countries as well as much higher duties on dozens of nations — was planned for April 2, but those higher rates were paused for 90 days. The tariff deadline is now set for Aug. 1.
As a result, shoppers haven’t yet felt the full effect of steep new tariffs, recent data shows. Still, faced with more expensive gear, many families are prepared to cut back.
“Consumers are being mindful of the potential impacts of tariffs and inflation on back-to-school items, and have turned to early shopping, discount stores and summer sales for savings on school essentials,” Katherine Cullen, NRF’s vice president of industry and consumer insights, said in a statement. 

Back-to-school saving strategies

Concerns over inflation, potential tariffs and product shortages are already pushing consumers to change their back-to-school shopping habits, reports also show.
According to Deloitte, 75% of parents said they will switch brands if their preferred brand is too expensive, up from 62% in 2024; 65% will shop at affordable retailers over their preferred stores.
More than half, or 56%, are cutting back on nonessential purchases altogether to save money, according to data from Intuit Credit Karma.

Nearly two-thirds, or 62%, of shoppers said they’ll begin back-to-school shopping before August, up from 54% in 2024, another report by Coresight Research found. That’s “probably to preempt any price rises,” Coresight analyst John Mercer recently told CNBC.
“We haven’t seen the tariff impact on that yet, largely because of the pauses,” he added.
“At some point, if tariffs come in, there will be price impacts,” Mercer said, and “consumers are right to be concerned.”

Still, more than half of parents — 53% — said they would go into debt to cover extracurriculars, and 46% said they would do the same for back-to-school items to help their child “fit in” at school, also up from the year before, according to NerdWallet’s 2025 back-to-school shopping report. Many parents are influenced to splurge on a “hot” back-to-school item or first-day outfit, Deloitte also found.
To help cushion the blow, consumer savings expert Andrea Woroch advises families to shop for gently used clothing, sporting goods, school supplies and certified-refurbished electronics on resale sites, use a price-tracking browser extension or app and apply coupon codes.
Also, take advantage of upcoming sales-tax holidays — often in late July and early August — to shave down the cost of big-ticket items such as computers, clothing and shoes, Woroch said.
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When Congress passed the “big beautiful bill” earlier this month, it created a new student loan repayment plan.
Here’s what to know about the option.

A student student sits in a lecture hall while class is being dismissed at the University of Texas at Austin on February 22, 2024 in Austin, Texas.
Brandon Bell | Getty Images

What are the new repayment plan’s terms?

RAP is what the Education Department calls an “income-driven repayment plan.” Congress created the first IDR plans back in the 1990s to make student loan borrowers’ bills more affordable. Historically, the plans cap people’s monthly payments at a share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years.
RAP is different in a few significant ways.
For one, it doesn’t shield a portion of a borrower’s income like other IDR plans do, but rather calculates their bill based on so-called adjusted gross income. (AGI is your total earnings before taxes, minus certain deductions.)
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The share of a borrower’s income that the plan requires also rises the more they earn. Under RAP, monthly payments will typically range from 1% to 10% of your earnings; the more you make, the bigger your required payment.
There will be a minimum monthly payment of $10 for all borrowers. (Under other IDR plans, certain low-income borrowers were entitled to a $0 monthly payment.)

RAP leads to student loan forgiveness after 30 years, compared with the typical 20-year or 25-year timeline on other IDR plans.

When will RAP be available?

RAP should be available by July 1, 2026, according to the Education Department.
Borrowers with existing loans will maintain access to some existing repayment plans, including Income-Based Repayment, or IBR.
However, after July 1, 2026, new borrowers will have just two options. They can pick between RAP or a standard repayment plan, under which their debt is divided into fixed payments over a period ranging from 10 years to 25 years, depending on their balance.

An important point to keep in mind: Even borrowers with old loans who take out a new one after July 1, 2026, will lose the existing options for that loan, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers. This will affect students partway through their degree, for example.
“If you borrow again, you will be in the world of two choices,” Buchanan said.

What benefits does RAP offer?

RAP comes with a few perks.
Federal student loan borrowers get $50 off their monthly bill per qualifying dependent, for example. Those who are keeping up with their bills but aren’t making progress paying down their principal will also get a small subsidy by the Education Department.
Plus, payments made under RAP will give borrowers credit on the decade-long timeline to debt relief under the Public Service Loan Forgiveness program.

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