The Fed indicated rates will remain higher for longer. What does that mean for you?

NEW YORK — NEW YORK (AP) — Mortgage rates, credit card rates, auto loan rates and variable-rate business loans are all likely to remain at their highest levels, impacting consumer spending, after the Federal Reserve signaled Wednesday it has no plans to cut spending. interest rates until it has “more confidence” that price increases at the consumer level will slow to the 2% target.

The central bank kept its key interest rate at a 20-year high of around 5.3%, where it has been since last August.

Here’s what you need to know:

Credit card rates are at or near record highs, and mortgage rates have more than doubled in recent years.

According to LendingTree, the average credit card interest rate in America today is 24.66%, unchanged from last month, although that rate has risen for 24 of the past 26 months.

“That’s unlikely to drop anytime soon, despite the Fed taking its foot off the accelerator,” said LendingTree Credit Analyst Matt Schultz. “That’s probably the unfortunate reality for the coming months.”

In the battle against credit card debt, 0% balance cards are “still your best weapon,” Schultz said, but “they are becoming increasingly difficult to obtain and their costs are rising.”

With delinquencies and debt rising for consumers as well, some banks are becoming more reluctant to take over transferred balances, he said, meaning consumers will need good credit to get approved.

Yields on savings accounts and certificates of deposit (CDs) are hovering at high levels, thanks to increased Fed interest rates, according to Ken Tumin, banking expert and founder of That said, “several banks have cut deposit rates (expecting) that the Fed will begin cutting rates sometime this year.”

Interest rates on certificates of deposit are the first to drop, and some online banks have also started cutting interest rates on online savings accounts. Ally Bank lowered its interest rate from 4.35% to 4.25% and Discover from 4.30% to 4.25%.

Still, most online banks kept the interest on their online savings accounts stable in 2024, and several online banks still offer yields of 5.25%. The highest online yield is currently 5.55%, while the average online 1-year CD yield as of April 1 is 4.94%, according to

Tumin notes that “interest rates on physical bank deposits continue to creep up,” and says that while their average interest rates have risen sharply over the past year, “they are still very low compared to online interest rates.”

The average return on savings accounts for all banks and credit unions, the vast majority of which are brick-and-mortar, is 0.52% as of April 24.

The Fed does not directly set mortgage rates, but it does have influence over them. The bond market, inflation and other factors all contribute to the high mortgage rates consumers are currently facing.

The average interest rate on a 30-year fixed-rate mortgage recently rose above 7% for the first time since November. LendingTree Senior Economist Jacob Channel notes that mortgage rates can change even if the Fed holds its benchmark rate steady, and consumers should consider many economic data points before deciding to take out a mortgage.

“Even with relatively high mortgage rates and high prices, now can still be a good time to buy a home,” he said. “Timing the market is virtually impossible… In that same vein, there are a lot of people who can’t buy until the market gets cheaper.”

High housing and rental costs have contributed to steep inflation in recent months.

A Bankrate study shows that renting is cheaper than buying a regular home in all 50 largest U.S. metro areas. As of February, the average monthly mortgage payment for a median-priced home in the U.S. was $2,703, while the typical national monthly rent was $1,979. That’s a difference of almost 37% between the costs of renting and buying a house.

“While it would be nice if the Fed could solve everything on its own, that’s probably not possible, at least not without causing a lot of crying and gnashing of teeth,” Channel said.

While car prices have held steady through late 2023 and early 2024, Bankrate Chief Financial Analyst Greg McBride predicts that high auto loan rates will stick around for those with weak credit profiles. Borrowers with stronger credit may see more competitive rates, but the Fed’s decision will continue to make auto loans expensive even as car prices fall. The average car loan has not been this expensive since 2008.

McBride predicts that by the end of 2024, rates on new car loans with a five-year term will average 7.0% and those on four-year used car loans will average 7.5%.

Over the past year, borrowers have faced particularly expensive monthly payments due to high interest rates, and auto loan delinquencies reached their highest level in nearly three decades. According to credit reporting agency Experian, the average monthly car loan payment in the fourth quarter of 2023 was $738 for new vehicles and $532 for used cars.

New cars cost an average of $47,218 in March 2024, according to Kelley Blue Book, a price that, combined with high interest rates, is pushing many buyers out of the new car market.

Not as fast as it would like.

Several recent reports on prices and economic growth have undermined the Fed’s belief that inflation was steadily declining.

“Inflation has shown that no further progress has been made towards our 2% target,” said Chairman Jerome Powell.

Although inflation has cooled from a peak of 7.1% to 2.7%, average prices remain well above pre-pandemic levels, and the cost of services continues to rise – including those for rents, healthcare, restaurant meals and car insurance .


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