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Federal Reserve cuts rates after election. What that means for you

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The Federal Reserve Building in Washington, D.C.

Joshua Roberts | Reuters

The Federal Reserve announced it will lower its benchmark rate by a quarter point, or 25 basis points, days after President-elect Donald Trump won the 2024 election.

Economic uncertainty was a prevailing mood heading into Election Day after a prolonged period of high inflation left many Americans struggling to afford the cost of living.

But recent economic data indicates that inflation is falling back toward the Fed’s 2% target, which paved the way for the central bank to trim rates this fall. Thursday’s cut is the second, following a half point reduction on Sept. 18.

The federal funds rate sets overnight borrowing costs for banks but also influences consumer borrowing costs.

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Since the central bank last met, the personal consumption expenditures price index — the Fed’s preferred inflation gauge — showed a rise of just 2.1% year over year

Even though the central bank operates independently of the White House, Trump has been lobbying for the Fed to bring rates down.

For consumers struggling under the weight of high borrowing costs after a string of 11 rate increases between March 2022 and July 2023, this move comes as good news — although it may still be a while before lower rates noticeably impact household budgets.

“The Fed raised rates from the equivalent of the ground floor to the 53rd floor of a skyscraper, now they are on the 47th floor and another rate cut will take us to the 45th floor — the view is not a whole lot different,” said Greg McBride, chief financial analyst at Bankrate.com.

From credit cards and mortgage rates to auto loans and savings accounts, here’s a look at how a Fed rate cut could begin to impact your finances in the months ahead.

Credit cards

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. Because of the central bank’s rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to more than 20% today — near an all-time high.

Annual percentage rates have already started to come down with the Fed’s first rate cut, but not by much.

“Still, these are sky-high rates,” said Matt Schulz, LendingTree’s credit analyst. “While they’ll almost certainly continue to fall in coming months, no one should expect dramatically reduced credit card bills anytime soon.”

Rather than wait for small APR adjustments in the months ahead, the best move for those with credit card debt is to shop around for a better rate, ask your issuer for a lower rate on your current card or snag to a 0% balance transfer offer, he said.

“Another rate cut doesn’t change the fact that the best thing people can do to lower interest rates is to take matters into their own hands.”

On the campaign trail, Trump proposed capping credit card interest rates at 10%, but that type of measure would also have to get through Congress and survive challenges from the banking industry.

Auto loans

Even though auto loans are fixed, higher vehicle prices and high borrowing costs have become “increasingly difficult to manage,” according to Jessica Caldwell, Edmunds’ head of insights.

“Amid this economic strain, it’s clear that President Trump’s promises of financial relief resonated with voters across the country,” she said.

The average rate on a five-year new car loan is now around 7%, up from 4% when the Fed started raising rates, according to Edmunds. However, rate cuts from the Fed will take some of the edge off the rising cost of financing a car — likely bringing rates below 7% — helped in part by competition between lenders and more incentives in the market.

“As Americans seek a reprieve from the relentless pressures on their wallets, even a modest federal rate cut would be seen as a positive step in the right direction,” Caldwell said.

Trump has supported making the interest paid on car loans fully tax deductible, which would also have to go through Congress.

Mortgage rates

Housing affordability has been a major issue due in part to a sharp rise in mortgage rates since the pandemic.

Trump has said he’ll bring down mortgage rates — even though 15- and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy. Trump’s victory even spurred a rise in in the U.S. 10-year Treasury yield, sending mortgage rates higher.

Cuts in the Fed’s target interest rate could, however, provide some downward pressure.

“Continued rate cuts could begin to drive down mortgage rates which have remained stubbornly high,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion. As of the week ending Nov. 1, the average rate for a 30-year, fixed-rate mortgage is 6.81%, according to the Mortgage Bankers Association.

Mortgage rates are unlikely to fall significantly, given the current climate, explained Jacob Channel, senior economist at LendingTree.

“As long as investors remain worried about what the future may bring, Treasury yields, and, by extension, mortgage rates are going to have a tough time falling and staying down,” Channel said.

Student loans

Student loan borrowers will get less relief from rate cuts. Federal student loan rates are fixed, so most borrowers won’t be immediately affected. (Efforts to forgive student debt are now likely off the table.)

However, if you have a private loan, those loans may be fixed or have a variable rate tied to the Treasury bill or other rates. As the Fed cuts interest rates, the rates on those private student loans will come down over a one- or three-month period, depending on the benchmark, according to higher education expert Mark Kantrowitz.

Still, a quarter-point cut will only cut monthly payments on variable-rate loans by “about $1 to $1.25 a month for each $10,000 in debt,” Kantrowitz calculated.

Eventually, borrowers with existing variable-rate private student loans may be able to refinance into a less expensive fixed-rate loan, he said. But refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, 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 Fed rate hikes, top-yielding online savings account rates have made significant moves and are still paying more than 5% — the most savers have been able to earn in nearly two decades — up from around 1% in 2022, according to Bankrate.

“Yes, interest earnings on savings accounts, money markets, and certificates of deposit will come down, but the most competitive yields still handily outpace inflation,” McBride said.

One-year CDs are now averaging 1.76% but top-yielding CD rates pay more than 4.5%, according to Bankrate, nearly as good as a high-yield savings account.

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College majors with the best and worst employment prospects

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AAron Ontiveroz/The Denver Post via Getty Images

College commencement is a time of optimism for newly minted graduates. But this year, there’s also more uncertainty about the economy and employment — and grads in some unexpected majors may find they have a leg up.

Majors in nutrition, art history and philosophy all outperformed STEM fields when it comes to employment prospects, according to a recent analysis of labor market outcomes of college graduates by major by the Federal Reserve Bank of New York.

For computer science and computer engineering, the unemployment rate in those fields was 6.1% and 7.5%, respectively — notably higher than the national average.

By comparison, the unemployment rate for art history majors was 3%, and for nutritional sciences, the unemployment rate was just 0.4%, the New York Fed found. The New York Fed’s report was based on Census data from 2023 and unemployment rates of recent college graduates.

Economics and finance majors also fared worse than those in theology and philosophy when it came to the employment rates for recent college graduates, according to the New York Fed.

Employment prospects are shifting

In general, what you choose to major in has significant implications for your job prospects and future earnings potential.

Majoring in STEM is often touted as the ticket to a well-paying position in good times and bad, and that is mostly true.

In fact, students who pursue a major specifically in computer science or computer engineering — both STEM disciplines — are projected to earn the most right out of school with median wages of $80,000.

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Even so, demand for humanities majors is on the rise, and with good reason, despite some student debt critics taking aim at the low value of some coursework, like “zombie studies,” for example.

At a conference last year, Robert Goldstein, the chief operating officer of BlackRock, the world’s biggest money manager, said the firm was adjusting its hiring strategy for recent grads. “We have more and more conviction that we need people who majored in history, in English, and things that have nothing to do with finance or technology,” Goldstein said.

This demand for liberal arts degrees is due in part to the rise of AI, which drives the need for creative thinking and so-called soft skills

Opportunities in health care

Meanwhile, jobs in the the health care sector continue to be in high demand in 2025.

The U.S. economy added 902,000 health care and social assistance jobs last year and employment in health care occupations is “projected to grow much faster than the average” for all U.S. jobs through 2033, according to the Bureau of Labor Statistics.

The unemployment rate among nursing majors is just 1.4%, the New York Fed also found.

“Nursing is extremely resilient in times of economic uncertainty, like we ae seeing right now,” said Travis Moore, a registered nurse and healthcare strategist at job site Indeed.

Although the median wage right out of school [for nurses] is lower than it is for economics and finance majors, heading into a possible economic downturn, job security may be a more important measure, he said.

“There’s a significant nursing shortage going on right now,” Moore said — and that “creates a really strong opportunity to get into a career with really low layoffs.”

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How college grads can find a job in a tough market

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A graduating student of the CCNY wears a message on his cap during the College’s commencement ceremony.

Mike Segar | Reuters

New college graduates looking for work now are finding a tighter labor market than they expected even a few months ago.

The unemployment rate for recent college grads reached 5.8% in March, up from 4.6% the same time a year ago, according to an April report from the Federal Reserve Bank of New York

Job postings at Handshake, a campus recruiting platform, are down 15% over the past year, while the number of applications has risen by 30%. 

Christine Cruzvergara, chief education strategy officer at Handshake, says new grads are finding a “tough and competitive” market.

“There’s a lot of uncertainty and certainly a lot of competition for the current graduates that are coming into the job market,” she said.

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How federal job cuts hurt the Class of 2025

While the job creation in the U.S. has continued to show signs of strength, policy changes have driven the uncertainty.

President Donald Trump has frozen federal hiring and done mass firings of government workers. Evercore ISI, an investment bank, estimated earlier this month that 350,000 federal workers have been impacted by cuts from Department of Government Efficiency, representing roughly 15% of federal workers, with layoffs set to take effect over the coming months.

“In early January, the class of 2025 was on track to meet and even exceed the number of applications to federal government jobs,” Cruzvergara said. When the executive orders hit in mid-January there was  “a pretty steep decline all of a sudden, she said.

“The federal government is one of the largest employers in this country, and also one of the largest employers for entry-level employees as well,” said Loujaina Abdelwahed, senior economist at Revelio Labs, a workforce intelligence firm.

Employment uncertainty related to tariffs, AI

On-again, off-again tariff policies have created uncertainty for companies, with a third of chief executive officers in a recent CNBC survey expecting to cut jobs this year because of the import taxes.

Job losses from artificial intelligence technology are also a concern.

A majority, 62%, of the Class of 2025 are concerned about what AI will mean for their jobs, compared to 44% two years ago, according to a survey by Handshake. Graduates in the humanities and computer science are the most worried about AI’s impact on jobs.

“I think it’s more about a redefinition of the entry level than it is about an elimination of the entry level,” Cruzvergara said.

Postings for jobs in hospitality, education services, and sales were showing monthly growth through March, according to Revelio Labs. But almost all industries, with the exception of information jobs, saw pullbacks in April.

How to land a job in a tough market

For new grads hunting for a job, experts advise keeping a positive mindset.

“Employers don’t want to hire someone that they feel like is desperate or bitter or upset,” said Cruzvergara. “They want to hire someone that still feels like there’s a lot of opportunity, there’s a lot of potential.”

Here are two tactics that can help with your search:

1. Look at small firms — they may provide big opportunities

Companies with fewer than 250 employees may offer better opportunities to grow and learn than bigger “brand name” firms, according to Revelio Labs.

A new study by Revelio found that five years into their careers, graduates had comparable salary progression,  promotion timelines, and managerial prospects — regardless of the size of their first employer. However, people who started their careers at small companies were 1.5 times more likely to become founders of their own companies later in their careers.

The study looked at individuals who earned bachelor’s degrees in the U.S. between 2015 and 2022, following their career paths post-graduation.

Why getting a job feels so difficult right now

While some young workers may have entered start-ups with the goal of starting their own firm in the future, Abdelwahed said there’s often an opportunity at smaller companies to be given responsibilities beyond the job’s role. 

“Because the company’s small and the work needs to get done, so they just start to develop this entrepreneurship drive,” Abdelwahed said.

2. Network and use informational interviews

Experts also urge recent grads to reach out to people working in industries that pique their interest.

“Take an interest in someone else. Ask them questions about how they got to where they are, what they’ve learned, what you should know about that particular industry, what are emerging trends or issues that are facing them in the field right now,” said Cruzvergara.

This approach can help you sound more knowledgeable in the application and interviewing process.

— CNBC’s Sharon Epperson contributed reporting.

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How to appeal your home’s property taxes

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Milan2099 | E+ | Getty Images

Many homeowners have seen their property taxes increase in recent years because of rising housing prices and local tax rates. But the property tax assessment isn’t always set in stone: filing an appeal may lower the cost for years.

The median property tax bill in the U.S. in 2024 was $3,500, up 2.8% from $3,349 in 2023, according to an April report by Realtor.com. 

How much you pay varies widely depending on where you live, and some places have seen higher bills and bigger increases.

As of 2023, the median property tax for homeowners in New York City was $9,937, according to a new report by LendingTree. The city ranks first among the metropolitan areas with the highest median property taxes. Rounding out the top three are San Jose, California and San Francisco, where homeowners paid a median $9,554 and $8,156, respectively.

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Over 40% of homeowners across the U.S. could potentially save $100 or more per year by protesting their assessment value, Realtor.com estimates, with median savings of $539 a year. 

“You’re banking on several years of savings,” said Pete Sepp, president of the National Taxpayers Union Foundation.

That’s because while some state or local governments mandate annual property tax reassessments, others set less frequent cycles with gaps of several years — and some have no set schedule at all. There are also some events that can trigger a reassessment, like a home sale or renovations.

Here’s what you need to know before you appeal a property tax increase, according to experts. 

‘You’re paying more than you should’

A tax assessment is the way officials determine the value of your property for tax purposes.

Your home’s market value, or what it would sell for, is a major component, but other factors can sway that result. It will ultimately depend on how property taxes are assessed in your area.

“It’s not a nationwide formula,” said Melissa Cohn, regional vice president of William Raveis Mortgage. 

However, it’s not uncommon for properties to be over-assessed, meaning you end up paying more in taxes than you should be, said Sepp. Sometimes it can be due to inaccuracies that were never corrected in your home’s assessment.

For example: Your assessment might have 2,500 square feet of livable space cited when it’s really 2,000 square feet, or note four full bathrooms when the home really has three full and one half-bath.

Why home payments are skyrocketing

“Those kinds of things get embedded in your property assessment, and year after year, you’re paying more than you should,” Sepp said.

NTUF estimates 30% to 60% of taxable property in the U.S. is over-assessed, based on reports from individual state tax assessors.

How to appeal

Appealing your assessment is “not a terribly difficult investment of time for a residential property owner,” said Sepp. “The processes are reasonably easy and fair.”

Should you be successful, the change typically takes effect for the current tax year, and it becomes the basis for your next assessment, he said.

If you plan to appeal your taxes, your goal is to demonstrate how the assessor is incorrectly applying the assessment formula to your house, said Sal Cataldo, a real estate lawyer and partner at O’Doherty & Cataldo in Sayville, New York. 

“It’s challenging the numbers that they’re plugging into the formula for your particular house,” he said. 

Here’s how to get started: 

1. See if your current assessment is accurate

The first step is to look at the accuracy of your own assessment. You should receive the assessment if it’s in the cycle. You should also be able to find or request your records online through your county, city or district assessor.

Make sure the details about your house are correct, said Sepp, such as the square footage or the age of your roof. 

If you notice inaccuracies, start to gather paperwork as evidence. For example, if the roof appears to be relatively new in your assessment, but is in fact much older, look in your records for invoices from contractors from when it was previously repaired, or even the home inspection from when you bought the property.

2. Compare your property to your neighbors’ homes

Knowledge of other houses in your neighborhood or homes close to yours is important because it can help you appeal your tax bill, said Cataldo.  

As tax records are public, you can find out what your neighbors with similar homes are paying in taxes. If you’re paying more, that might be an indication that your taxes may be over-assessed, he said. 

You’ll also be able to see if they are paying less taxes because they qualify for tax exemptions, Cataldo said.

3. See if you qualify for tax exemptions

4. Know your deadline

Make sure to meet your area’s recurring deadline to appeal your bill, Sepp said. Sometimes it will appear in fine print in the assessment. The time window to file your paperwork can span from 30 to 45 days ahead of that deadline, for example.

5. Seek expert guidance

Sometimes it might be worth tapping expert guidance or advice, such as a real estate agent who’s very knowledgeable about your area, or an appraiser. They can help you compare home values to yours. Before you hire someone, research to understand what their services entail and what they charge.

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