What the Fed's rate cut means for your money in 2026

"The Federal Reserve made its final decision of 2025, cutting interest rates for the third meeting in a row - and it set the tone for where interest rates will go in the new year. The call will have ripple effects across consumer prices, the job market, and Corporate America through 2026 and beyond. Here's how the decision will affect you."

"Thirty-year fixed mortgages, two-year auto loans, and credit card rates tend to fluctuate alongside the federal funds rate. And, while inflation remains above the Fed's 2% goal, mortgage rates have largely cooled in recent months in anticipation of rate reductions. A quarter-point cut could mean lower returns on investment for savers using high-yield savings accounts or certificates of deposit, though it would become cheaper to pay off credit cards. Lower rates would also make home equity lines and small business loans more accessible to Americans."

"The labor market has shown signs of weakness in recent months. Job seekers of all ages have told Business Insider that they've been through grueling application cycles without an offer, while recruiters are drowning in resumés. Over the summer, the number of Americans looking for work eclipsed the number of available jobs and labor force participation has been trending downward. The unemployment rate, however, is still relatively low, hovering a little above 4% for most of this year."

The Federal Reserve reduced interest rates for the third consecutive meeting in 2025 and indicated one cut penciled in for 2026. The rate cut can lower borrowing costs for mortgages, auto loans, and credit cards while cooling returns for savers using high-yield accounts and CDs. Lower rates can make it cheaper to pay down credit-card debt and increase access to home equity lines and small-business loans. The labor market has shown weakness, with many job seekers facing long application cycles and recruiters receiving large numbers of resumés, even though unemployment has stayed slightly above 4%.

Read at Business Insider