Fed Rate Moves Explained: How To Navigate Rate Changes on Loans, Credit and Savings
The Federal Reserve kept the target range for the federal funds rate at 3.50% to 3.75% at its March 2026 meeting.
The last time the Fed changed the rate was in December 2025, when it lowered it by a quarter of a percentage point. The Fed made three cuts in 2025.
How and why does the federal funds rate affect me?
The federal funds rate doesn’t directly change the interest rates you receive on loans or bank accounts, but it’s often the driving force behind whether they rise or fall.
Generally, as rates rise, you will pay more in interest on loans but receive more interest on your savings.
On the flip side, as rates drop, you will pay less in interest on loans but also receive less interest on your savings.
When the Fed raises rates, it typically makes it more expensive for consumers and businesses to borrow money. The Fed often does this to cool down the economy in order to fight inflation.
When the Fed cuts rates, consumers and businesses can typically borrow money more cheaply. It usually does this when it wants to stimulate the economy and inflation is less of a concern.
What to do if interest rates change
The Fed meets and makes a decision on rates eight times a year. Here’s what to do if they raise or lower the federal funds rate at one of their meetings.
When interest rates go down
When the Fed cuts rates, here are some best practices to follow:
Compare refinance rates
If you borrowed when rates were at their peak, now could be a good time to refinance your mortgage, refinance your auto loan or refinance your personal loan. This is especially true if you’ve also improved your credit score since you took out your original loan. (You can check your credit score and receive credit alerts for free with LendingTree Spring.)
You might be tempted to wait for further rate cuts, but refinancing earlier might end up saving you thousands of dollars in interest in the meantime.
With the Fed keeping rates unchanged for some time, Americans hoping for lower borrowing costs may need to be proactive. Comparing lenders, negotiating rates and exploring alternatives can often save more than waiting for policy changes.
Consider making that big purchase
Between high rates and high home costs, many would-be homebuyers have felt locked out of the market. Houses are still more expensive than they were pre-pandemic. That’s unlikely to change in the near future. The same is true for cars. But taking advantage of reduced interest rates could help you offset those increased costs.
Simply put, there really isn’t a “perfect” time to buy. But if you’ve been holding off on a major purchase, making it after a rate decrease could be your best bet. If rates drop even more in the future, consider refinancing.
See if consolidating your credit card debt will save you money
Credit cards have variable rates, which means they go up and down as the market fluctuates. Compare debt consolidation loans to see if you qualify for a lower rate than what you’re carrying across your cards.
And economic conditions aside, borrowers with very good or excellent credit (740+) typically see lower rates on debt consolidation loans than credit cards.
When interest rates go up
Though the Fed hasn’t increased rates since 2023, it’s still important to have a plan for potential rate hikes in the future. Here’s what to do if rates go up:
Pay down your credit cards
When rates go up, your credit card interest rate may take a month or two before it goes up too. If you have credit card debt, this means your monthly payments would grow and you’d be paying more in interest — costing you a lot more money.
If you currently have credit card debt and rates are expected to go up, consider making bigger and more frequent payments to pay it off more aggressively. Signing up for a 0% interest balance transfer credit card or card with an intro 0% annual percentage rate (APR) offer can shield you from fluctuating interest rates too.
Lock in your mortgage rate
If you already have a fixed-rate mortgage, don’t worry — your interest rate will always stay the same, no matter what the Fed does.
But after a rate hike, rates on a new mortgage could trend up. Rates on products like home equity lines of credit (HELOCs) and adjustable-rate mortgages (ARMs), which are pegged to the prime rate, will also increase if rates do.
Set your auto loan rate
Like mortgage rates, auto loan rates can go up alongside Fed rate hikes. Refinancing terms also become less favorable in an environment of rising rates. If you think rates will go up, locking in a lower rate by buying your car now may help you spend less money on interest.
If you’re planning on buying a car, pay attention to the APR and move fast if you want today’s rates. If rates increase down the line, the interest rates on new auto loans could rise as well.
Grow your savings
There’s some good news when it comes to the Fed raising interest rates: savings accounts tend to earn more interest.
Shop around for the best rates, because not all banks will pay you more. Look for a high-yield savings account, compare annual percentage yields (APYs) and choose the bank with the most attractive offer. The higher the APY, the more interest you’ll earn. You may need to move your money from one bank to another, but the hassle could be worth it.
When interest rates don’t change
Even when the Fed is gradually raising or lowering rates, it might not make changes to the federal funds rate target at every meeting.
Keep an eye out for news
Fed interest rate hikes and cuts usually come in cycles, with the Fed going in one direction for a while until it signals a change in course.
Sometimes your own interest rates can be affected not by what the Fed does, but what the markets think it will do at the next meeting. If you see something in the news that could change how much inflation or economic growth is coming in the near future, be sure to check your accounts for any interest rate surprises.
Frequently asked questions
No, the Fed didn’t change the federal funds rate at its latest meeting in March 2026. The target range is still 3.50% to 3.75%.
The Fed doesn’t directly control the rates at which banks lend to consumers and businesses. However, it controls the federal funds rate, which determines the rate at which depository institutions lend each other money, and in turn affects the rates that consumers receive.
The Fed will decide on any changes to the federal funds rate at its next meeting, which is scheduled for April 28-29, 2026.
You can stream the Fed’s press conference with Chair Jerome Powell after every meeting on the Fed’s official YouTube channel.
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