The Fed Rate Cut Could Help These 3 Groups Save Big Money in 2025


The Federal Reserve slashed the federal funds rate by half-a-percentage-point on Sept. 18, 2024, causing savings account and certificate of deposit (CD) rates to dip from the 5.00% APY highs we enjoyed for over a year. That’s the bad news.

The good news is, interest rates on other types of banking products are coming down too. And with more rate cuts expected throughout the rest of the year into 2025, the following three groups could save a lot of money.

1. Homeowners who took out mortgages in the last few years

Mortgage interest rates have been high for the last few years, and that’s caused many recent home buyers to pay more than they would have if they’d purchased their homes before inflation got out of hand. But things are looking up.

Mortgage interest rates have already come down slightly and they’re likely to decrease further with more rate cuts. To be clear, the federal funds rate doesn’t directly affect mortgage rates, but many banks typically cut their rates when the Fed slashes the federal funds rate. 

If you hope to refinance, I’d wait until later in 2025. Refinancing means a lot of paperwork and you’ll have to pay closing costs again. It’s something you only want to do once. Since we anticipate more rate cuts, it’s smarter to wait until rates come down further before proceeding with refinancing.

2. Those who took out a personal loan in the last few years

Like homeowners, those who took out a personal loan in the last few years likely paid a higher rate simply due to the economic conditions when they took out the loan. This could prove even more costly for personal loan borrowers than homeowners because personal loans are unsecured debt. Since there’s nothing the lender can collect if you fail to pay back what you owe, they charge higher interest rates to begin with. 

Refinancing your personal loan could help you secure a more affordable monthly payment. Or if you’re comfortable with your current payment, you may be able to pay your debt off more quickly.

But again, timing is critical. Personal loans also have closing costs, so you only want to refinance them once. Wait until a few more rate cuts happen so you can lock in a significantly lower rate.

3. Credit card owners carrying a balance

Credit cards are also a form of debt that charges interest to those who carry a balance, so they may also see a dip in their rates. However, it’s up to the lender to decide how much to drop its annual percentage rates (APRs). 

Credit card companies are required to notify you when making a change to your card’s interest rate. However, this notice often comes in the form of a small mention on your monthly statement, so it’s easy to miss. Check your latest bill if you’re not sure how much you’re paying in interest each month.

Keep in mind that, while a lower credit card interest rate is helpful, it’s still considered high-interest debt. It’s in your best interest to pay it off as quickly as possible, so you can divert all the money that’s going toward those payments to some of your long-term goals.

If you have any questions about your loan or credit card’s interest rates or how the company’s rates may change over time, reach out with questions. Keep an eye out for further Fed rate cuts as well, so you know when you may want to consider refinancing.



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