Trickle from the Fed’s benchmark interest rates is most obvious on credit cards, but it’s a very minor change in numbers.
The average credit card balance rate has been steadily increasing since the Fed began raising interest rates in 2022 until the Fed reached just under 21% last fall, according to Bankrate. Since then, prices have been fine-tuned downwards, hovering at around 20.1% in the first half of 2025.
According to Freddie Mac, car loans had little movement in the first half of 2025, with 30-year fixed-rate mortgages hovering between 6.6% and 7.1%, which are more closely linked to the 10-year Treasury yield.
“No guarantee” to lower borrowing costs
President Donald Trump argues that maintaining an overly high federal funding rate makes it difficult for businesses and consumers to borrow, essentially pumping the brakes on economic growth and housing markets.
Still, there is “no guarantee” that rate reductions will translate into lower borrowing costs for most Americans, according to Brett House, an economics professor at Columbia Business School.
While some fluctuating loans, like credit cards, lead directly to the Fed’s benchmarks, other loans, such as mortgage fees, are more closely pinned than the Treasury yields and the US economy. “If we reduce the Fed’s funding rate in the face of increased inflation, we could potentially lower mortgage rates.”
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