Personal Finance
What that means for you
The Federal Reserve is expected to lower interest rates by another quarter point at the end of its two-day meeting on Dec. 18. That would mark the third rate cut in a row — altogether shaving a full percentage point off the federal funds rate since September.
So far, the central bank has moved slowly as they recalibrate policy after swiftly hiking rates when inflation hit a 40-year high.
“This could be the last cut for a while,” said Jacob Channel, senior economic analyst at LendingTree.
The Fed might choose to take “a wait-and-see approach” because there is some uncertainty around President-elect Donald Trump’s fiscal policy when he begins his second term, he said.
In the meantime, high interest rates have impacted all sorts of consumer borrowing costs from auto loans to credit cards.
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The federal funds rate, which the U.S. central bank sets, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.
A December cut could lower the Fed’s overnight borrowing rate by a quarter percentage point, or 25 basis points, to a range of 4.25% to 4.50% from its current 4.50% to 4.75% level.
That “will exert some margin of easing of financial pressure,” said Brett House, economics professor at Columbia Business School — but not across the board.
“Some of the most important interest rates that people face don’t benchmark off the Fed rate,” he said.
From credit card to car loans to mortgages, here’s a breakdown of how it works:
Credit cards
Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to 20.25% today, according to Bankrate — near an all-time high.
Even though the central bank started cutting interest rates in September, the average credit card interest rate has barely budged. Card issuers are often slower to respond to Fed decreases, said Greg McBride, Bankrate’s chief financial analyst.
“The rate will go a step lower but with a lag up to three months,” Mc Bride said.
A better move for those with credit card debt is to switch to a 0% balance transfer credit card and aggressively pay down the balance, he explained.
“Interest rates are not going to fall fast enough to do the heavy lifting for debt-burdened consumers,” he said.
Mortgage rates
Because 15- and 30-year mortgage rates are fixed and mostly tied to Treasury yields and the economy, they are not falling in step with Fed policy. And since most people have fixed-rate mortgages, their rate won’t change unless they refinance or sell their current home and buy another property.
As of the week ending Dec. 6, the average rate for a 30-year, fixed-rate mortgage is 6.67%, according to the Mortgage Bankers Association.
Those rates are down somewhat from the previous month, but well above the 2024 low of 6.08% in late September.
“Going forward, mortgage rates will likely continue to fluctuate on a week-to-week basis and it’s impossible to say for certain where they’ll end up,” Channel said.
Auto loans
Auto loans are fixed. However, payments have been getting bigger because car prices are rising and that has resulted in less affordable monthly payments.
The average rate on a five-year new car loan is now around 7.59%, according to Bankrate.
While anyone planning to finance a new car could benefit from lower rates to come, the Fed’s next move will not have any material effect on what you get, said Bankrate’s McBride. “Sticker prices are high and the amounts being financed by borrowers are very, very high,” he said — around $40,000, on average.
“Even at very low rates, that is a budget-busting monthly payment.”
Student loans
Federal student loan rates are also fixed, so most borrowers won’t be immediately affected by a rate cut. However, if you have a private loan, those loans may be fixed or have a variable rate tied to the T-bill or other rates, which means as the Fed cuts rates, the rates on private student loans will come down as well.
Eventually, borrowers with existing variable-rate private student loans may also be able to refinance into a less expensive fixed-rate loan, according to higher education expert Mark Kantrowitz.
However, refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, he said, “such as deferments, forbearances, income-driven repayment and loan forgiveness and discharge options.”
Additionally, extending the term of the loan means you ultimately will pay more interest on the balance.
Savings rates
While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.
As a result of the Fed’s string of rate hikes in recent years, top-yielding online savings account rates have offered the best returns in decades and still pay nearly 5%, according to Bankrate’s McBride.
“This is still a good time to be a saver and a good time for cash,” he said. “The most competitive offers are still well ahead of inflation and that’s likely to persist.”
A sign for the U.S. Social Security Administration is seen outside its headquarters in Woodlawn, Md., on Thursday, March 20, 2025.
Tom Williams | Cq-roll Call, Inc. | Getty Images
New anti-fraud protections are slated to go into effect on Monday at the Social Security Administration.
Ahead of the new policy, an agency spokesperson confirmed on Wednesday that all claim types can still be completed over the telephone, including retirement, survivor and spousal or children’s benefits. Previously, the SSA said those applicants would need to visit an agency office in person for identity proofing.
Individuals making other benefit claims — including for Social Security disability insurance, Medicare and Supplemental Security Income — can also complete their claims entirely over the telephone, which is in line with the agency’s previous guidance, according to the spokesperson.
The Social Security Administration’s update did not mention changes to direct deposit information, which it had previously said would now require in-office visits.
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The agency’s new anti-fraud efforts come as new leadership under the Trump administration’s so-called Department of Government Efficiency is broadly seeking to curb waste, fraud and abuse across federal government agencies.
The SSA is implementing the new anti-fraud procedures, including stricter identity verification, as the agency faces website outages and long wait times on its 800 number, potentially forcing more people to visit offices for assistance.
Social Security experts and advocates have raised concerns that the new policies may make accessing benefits more difficult for vulnerable populations, particularly seniors and people with disabilities.
However, the Social Security Administration’s update is a positive development, said Bill Sweeney, senior vice president of government affairs at AARP. He did add that it would be more ideal if the policy and timeline were reconsidered for better outcomes.
“This seems like a pretty good and encouraging signal that they’re listening to folks, that they’re that they’re open to pivoting and reconsidering how to roll these things out and looking at new ideas for how to implement it,” Sweeney said.
Some beneficiaries will still need to visit offices
As the Social Security Administration starts to perform anti-fraud checks over the phone, some claims will be flagged for fraud risks, according to the agency.
Those claimants who are flagged will be required to visit a Social Security Administration office in person for their claim to be processed.
The agency estimates that about 70,000 claimants may be flagged out of 4.5 million telephone claims per year.
Benefit applicants who are not flagged will be able to complete their claims completely over the telephone.
“Telephone remains a viable option to the public,” the Social Security Administration posted on X on Tuesday.
Prior to the Social Security Administration’s update that expands the claim types that can be completed over the phone, the agency had reportedly estimated about 75,000 to 85,000 more people per week may visit its offices in-person.
Online applications may be difficult for many seniors and individuals with disabilities, who may lack access to the necessary resources or know how to navigate the processes, according to the Center on Budget and Policy Priorities, a nonpartisan research and policy institute.
More than 10% of seniors in 35 states would need to travel more than 45 miles to get to the closest Social Security office, according to a new analysis from the Center on Budget and Policy Priorities.
About 6 million seniors don’t drive, while almost 8 million older Americans have a medical condition or disability that makes it difficult for them to travel, according to the research from Center on Budget and Policy Priorities.
Many beneficiaries already face obstacles getting through to the Social Security’s phone lines to make an in-person appointment and then need to drive to a field office, said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities. Generally, individuals need to call for an appointment, though the agency does urge beneficiaries to first try seeking help online.
‘Fear and concern among many older Americans’
Both experts and advocates take issue with the tight timeline under which the policy changes are being implemented.
“If you’re asking seniors and other SSA customers to do something different, you need to provide enough time for them to understand what it is they need to do,” Romig said.
The AARP sent a letter on Monday to Social Security Administration acting commissioner Lee Dudek urging the agency to “halt changes to phone services,” which will “only exacerbate the ongoing customer service crisis,” wrote Nancy LeaMond, chief advocacy and engagement officer.
Instead, the new policy changes should be done more deliberately, with public input, a clear communication strategy and reasonable timeline, the AARP explained in the letter.
The changes set to go into effect on Monday come as Social Security’s website has recently repeatedly crashed, phone service hold times have increased and in some cases disconnected callers, while field offices also have long in-person waits, LeaMond said in the letter.
“This chaotic environment is fueling fear and concern among many older Americans,” LeaMond wrote.
The federal tax deadline is less than one week away — and there’s still time to collect a pandemic-era IRS stimulus check. It’s your final chance to do so.
If you’re unsure if you received the money, there’s a simple way to check via your IRS account online, tax experts say.
The 2021 stimulus payments were worth up to $1,400 per individual, or $2,800 per married couple. A family of four could receive up to $5,600 with two eligible dependents.
Filers who never received the funds could claim the recovery rebate credit on their 2021 federal return. The last chance for that credit is the 2024 tax deadline on April 15, according to the IRS.
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You’re eligible for the full recovery rebate credit with up to $75,000 in adjusted gross income as a single filer or $150,000 for married couples filing jointly for 2021.
The phaseout begins with earnings above that and eligibility falls to zero once adjusted gross income reaches $80,000 for single filers or $160,000 for married couples filing together.
The ‘best place to look’ for stimulus checks
The IRS in December unveiled plans to send “special payments” to 1 million taxpayers who didn’t claim the 2021 recovery rebate credit on tax returns for that year.
Most payments should have arrived via direct deposit or mailed paper check by late January 2025, according to the agency.
You can create a login for your IRS online account to check the status of your economic impact payments, including the 2021 stimulus check.
“That’s the best place to look,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
After logging into your account, you can find stimulus check information in the “tax records” section under the “records and status” toolbar.
You can also check the “tax records” section to see if you filed a return for 2021. While some taxpayers don’t earn enough to have a filing requirement, you must submit your 2021 return to claim the recovery rebate credit for your stimulus payment, Lucas explained.
File your 2021 return if ‘there’s any doubt’
In some cases, online accounts show the IRS issued stimulus checks, but filers say they never received the money, said Syracuse University law professor Robert Nassau, director of the school’s low-income tax clinic.
“If there’s any doubt” about your payment, it’s better to file your 2021 return and claim the recovery rebate credit before April 15, he said. Otherwise, you could miss the deadline and lose your chance to collect the money, Nassau added.
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