How federal interest rate cuts affect you (and what to do)
Updated Nov. 21, 2025, at 1:52 p.m. CST
Federal interest rates have been trending lower again. And even though decisions from the Federal Reserve might seem far removed from your everyday life, they play a big role in what you pay—and what you earn.
When rates fall, borrowing usually becomes cheaper across the board. Whether you’re paying off debt or thinking about refinancing, a lower-rate environment can open up opportunities to free up cash flow and make financial goals more achievable.
“For members with existing variable-rate loans, rate reductions can lower your borrowing costs when your next adjustment happens,” said Chief Operating Officer Matt Dodds. “That can free up cash flow or let more of your payments go toward the principal instead of interest, giving you more room to borrow if you need it.”
Here’s what these rate changes mean for you—and what you can do to make the most of them.
How falling rates affect your borrowing
When the Federal Reserve lowers rates, lower rates trickle into everyday borrowing, reducing what you pay to use credit.
That makes borrowing becomes more affordable. Lower rates often translate into reduced costs for loans—whether you’re buying a car, consolidating debt or refinancing your mortgage. This can make room in your monthly budget and give you more flexibility.
“We will continue to closely monitor the market so we can take care of our members,” Dodds said.
Here’s how the changes show up across different loan types.
Credit cards
Credit cards typically have variable interest rates tied to the prime rate, which moves with the federal funds rate. So when the Fed cuts rates, card rates tend to follow.
That could mean:
- Lower interest charges
- More of your monthly payment going toward your balance
- Some breathing room if you’re carrying debt
Home equity line of credit
If you have a home equity line of credit, it also comes with a variable interest rate and can be tied to the prime rate.
When rates fall, your HELOC costs usually fall too, helping lower your monthly payment or interest charges. This could give you more flexibility to borrow for home improvements or other big expenses.
Student loans
Student loans can be fixed or variable.
- Variable-rate loans may become cheaper as the lower-rate environment filters through.
- Fixed-rate loans won’t automatically change, but it might be worth reviewing whether your repayment strategy still works with your budget.
If you’re not sure how your student loans are structured, consider reaching out to Dupaco to understand your options and make sure you’re borrowing an amount that fits your budget.
Personal and auto loans
While personal and auto loans aren’t directly tied to the Fed’s rate changes, these rates also typically fall eventually.
“Variable-rate loans have to adjust, but the market will start demanding that fixed-rate loans come down, too,” said Meggan Heacock, vice president, controller at Dupaco.
Lower rates can make financing more affordable. If you’ve been waiting to replace your car, consolidate debt or need extra funds for something else, this could be the right time to explore your options.
Mortgage loans
Mortgage rates typically follow the 10-year Treasury yield but are also intertwined with the market, Heacock said.
And mortgage rates have also been trending down.
If you’re a homeowner, refinancing your mortgage into a lower rate could mean big long-term savings.
Learn what to consider before refinancing >
How falling rates affect your savings
When rates drop, borrowers generally win in the form of lower interest on their loans. But savers can face lower returns on their deposits. (The positions shift when interest rates rise.)
During lower-rate periods, Dupaco tries to bring loan rates down first and then evaluate its above-market savings rates, Heacock said.
If you’ve been looking at a certificate, money market account or a high-yield savings account, it may be smart to lock in at a higher rate sooner than later.
“Certificate rates are the most fluid, so those are expected to continue to come down with the market,” she said. “We work to keep our rates steady, consistent and strong for our members.”
Eventually, the market demands that if a financial institution is receiving less in loan interest, it must pay out less in deposits to help offset the decrease. Ultimately, this helps keep the credit union strong for its members, Heacock said.
3 smart moves in a lower-rate environment
- Review your loans: Look for opportunities to refinance or move high-interest debt into lower-rate options.
- Adjust your savings strategy: Secure higher rates on certificates or explore money markets before rates drop further.
- Revisit your budget and financial plan: Rate changes are a good reminder to reassess your spending, saving and repayment strategies.
Bottom line
Federal interest rate changes influence more than headlines—they directly affect your budget, savings and cost of borrowing.
By understanding how rate cuts impact your loans and savings, you can make informed decisions, free up cash and strengthen your financial plan.
