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What a second Trump administration could mean for your money

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Tackling Taxes

On the campaign trail, President Donald Trump promised lower taxes, lower prices and a stronger economy in his second term.

On Day One of his second term, Trump signed a flurry of executive orders — including a regulatory freeze pending an administration review and a directive to members of his administration to assess trade relationships with Canada and China and Mexico — to try and move some of his goals forward. But delivering on those and other promises will take additional steps, and in many cases, the support of Congress. 

Here are five ways a second Trump administration could impact your finances.

The White House did not immediately respond to requests from CNBC for comment.

1.Tariffs could send prices higher

One wildcard is tariffs. There are a range of views on how Trump will use tariffs and the impact those tariffs will have on prices. Tariffs are paid by businesses buying the goods and some of the cost is typically passed to consumers

During the campaign, Trump promised a 10% across-the-board tariff on all imports, a 25% tariff on all goods from Mexico and Canada and a tariff of up to 60% on products from China. Trump’s Day One order to assess trade relationships puts an April 30 deadline on those reviews.

“We view Trump’s decision against announcing new tariffs on his first day in office as evidence of the ongoing internal debate over how best to implement the duties, not as a sign of plans to significantly scale back or withdraw his campaign pledges to impose new duties on foreign goods,” Beacon Policy Advisors wrote in a research note.

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During his confirmation hearing last week, Trump’s pick for Treasury secretary Scott Bessent told lawmakers to think about tariffs in three ways: as a remedy for unfair trade practices, a revenue raiser and a negotiating tool. He pushed back on Democrats who said tariffs will mean higher prices for consumers.

“China, which is trying to export their way out of their current economic malaise, will continue cutting prices to maintain market share,” Bessent said. 

2. Tax rates and deductions may change

Unless Congress takes action, trillions of tax breaks are scheduled to expire at the end of the year, including lower tax brackets. More than 60% of taxpayers could see higher taxes in 2026 without extensions of provisions in the Tax Cuts and Jobs Act, or TCJA, according to the Tax Foundation.

Extending those provisions is a heavy lift amid concerns over ballooning federal debt. According to the Congressional Budget Office, the federal budget deficit is expected to rise to $1.9 trillion this year, adding more onto the $36.2 trillion in outstanding debt.

TCJA provisions will cost an estimated $4 trillion dollars over the next 10 years, according to a budget model by Penn Wharton. Trump also promised to eliminate taxes on tips and Social Security, which would drive the price tag exponentially higher. That puts a lot up for negotiation as lawmakers debate spending and taxes this year. 

“Fiscal pressures are going to weigh harder on the debate than they did the first time around,” Erica York, a senior economist and research director at the Tax Foundation, said at CNBC’s Financial Advisor Summit in December.

Experts predict one of the key battles will be over the state and local tax deduction, also known as SALT.  Under current law those deductions are now capped at $10,000. High-tax states like California, New York and New Jersey all have top tax rates above 10%, so changes there would be meaningful for many taxpayers who itemize deductions. Putting that cap in place freed up an estimated $100 billion a year in the federal budget, helping offset other cuts. 

The maximum child tax credit was also doubled under the TCJA, from $1,000 to $2,000. On the campaign trail, Vice President JD Vance said he wants to increase the credit to $5,000. Trump has said he supports the credit, but has not specified an amount. Both are costly in budget terms. 

3. Health care costs may increase

To keep Trump’s campaign promise to protect Social Security and Medicare, cuts to other health care programs become a way to fund tax proposals. House Republican lawmakers have identified $2.3 trillion in cuts to Medicaid, according to a document made public by Politico.

Subsidies to lower the cost of health insurance under the Affordable Care Act are also at risk. Without an extension by Congress, the subsides expire at end of 2025. Some individuals could see their premiums significantly increase. Because policy changes under the budget reconciliation process are limited, some analysts expect those subsidies to run out.

“It’s unfortunate because there are any number of compromises that could be crafted to better target the subsidies in exchange for extending them and stabilizing the market,” said Kim Monk, a partner at Capital Alpha Partners. 

4. Credit card rates could move lower

People with credit card balances could benefit if Trump makes good on his proposal for a temporary 10% cap on credit card interest rates. Senator Bernie Sanders, I-Vt., said on Thursday he was drafting legislation to do exactly that. The catch: If enacted, experts say, it could also make it harder for people to get credit.

While analysts say a cap is unlikely, the attention to the issue puts it on the watch list.

“It means there is risk that Trump could intervene with credit card policy even if it is not a draconian interest rate cap,” said Jaret Seiberg, a financial policy analyst at TD Cowen.

5. Markets may be more volatile

Traders work on the New York Stock Exchange (NYSE) floor in New York City. 

Spencer Platt | Getty Images

With so many policy changes expected and so much uncertainty with how they will unfold, experts predict that markets could be volatile.

“This first year here, 2025, it’s going to be super volatile,” said Dan Casey, an investment advisor at Bridgeriver Advisors in Bloomfield Hills, Michigan.

The key for individuals is to understand their personal financial situation so they don’t have to sell if the market is down. 

“It’s knowing your numbers and whatever money you have in the market,” Casey said.

For long-term goals like retirement, he said, “hold your nose and not open up the statements for a while, because it can get that ugly.”

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Trump administration loses appeal of DOGE Social Security restraining order

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A person holds a sign during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025. 

Nathan Layne | Reuters

The Trump administration’s appeal of a temporary restraining order blocking the so-called Department of Government Efficiency from accessing sensitive personal Social Security Administration data has been dismissed.

The U.S. Court of Appeals for the 4th Circuit on Tuesday dismissed the government’s appeal for lack of jurisdiction. The case will proceed in the district court. A motion for a preliminary injunction will be filed later this week, according to national legal organization Democracy Forward.

The temporary restraining order was issued on March 20 by federal Judge Ellen Lipton Hollander and blocks DOGE and related agents and employees from accessing agency systems that contain personally identifiable information.

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That includes information such as Social Security numbers, medical provider information and treatment records, employer and employee payment records, employee earnings, addresses, bank records, and tax information.

DOGE team members were also ordered to delete all nonanonymized personally identifiable information in their possession.

The plaintiffs include unions and retiree advocacy groups, namely the American Federation of State, County and Municipal Employees, the Alliance for Retired Americans and the American Federation of Teachers. 

“We are pleased the 4th Circuit agreed to let this important case continue in district court,” Richard Fiesta, executive director of the Alliance for Retired Americans, said in a written statement. “Every American retiree must be able to trust that the Social Security Administration will protect their most sensitive and personal data from unwarranted disclosure.”

The Trump administration’s appeal ignored standard legal procedure, according to Democracy Forward. The administration’s efforts to halt the enforcement of the temporary restraining order have also been denied.

“The president will continue to seek all legal remedies available to ensure the will of the American people is executed,” Liz Huston, a White House spokesperson, said via email.

Fiserv CEO on the nomination to Social Security Commisioner role

The Social Security Administration did not respond to a request from CNBC for comment.

Immediately after the March 20 temporary restraining order was put in place, Social Security Administration Acting Commissioner Lee Dudek said in press interviews that he may have to shut down the agency since it “applies to almost all SSA employees.”

Dudek was admonished by Hollander, who called that assertion “inaccurate” and said the court order “expressly applies only to SSA employees working on the DOGE agenda.”

Dudek then said that the “clarifying guidance” issued by the court meant he would not shut down the agency. “SSA employees and their work will continue under the [temporary restraining order],” Dudek said in a March 21 statement.

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Most credit card users carry debt, pay over 20% interest: Fed report

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Julpo | E+ | Getty Images

Many Americans are paying a hefty price for their credit card debt.

As a primary source of unsecured borrowing, 60% of credit cardholders carry debt from month to month, according to a new report by the Federal Reserve Bank of New York.

At the same time, credit card interest rates are “very high,” averaging 23% annually in 2023, the New York Fed found, also making credit cards one of the most expensive ways to borrow money.

“With the vast majority of the American public using credit cards for their purchases, the interest rate that is attached to these products is significant,” said Erica Sandberg, consumer finance expert at CardRates.com. “The more a debt costs, the more stress this puts on an already tight budget.”

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Most credit cards have a variable rate, which means there’s a direct connection to the Federal Reserve’s benchmark. And yet, credit card lenders set annual percentage rates well above the central bank’s key borrowing rate, currently targeted in a range between 4.25% to 4.5%, where it has been since December.

Following the Federal Reserve’s rate hike in 2022 and 2023, the average credit card rate rose from 16.34% to more than 20% today — a significant increase fueled by the Fed’s actions to combat inflation.

“Card issuers have determined what the market will bear and are comfortable within this range of interest rates,” said Matt Schulz, chief credit analyst at LendingTree.

APRs will come down as the central bank reduces rates, but they will still only ease off extremely high levels. With just a few potential quarter-point cuts on deck, APRs aren’t likely to fall much, according to Schulz.

Credit card debt?

Despite the steep cost, consumers often turn to credit cards, in part because they are more accessible than other types of loans, Schulz said. 

In fact, credit cards are the No. 1 source of unsecured borrowing and Americans’ credit card tab continues to creep higher. In the last year, credit card debt rose to a record $1.21 trillion.

Because credit card lending is unsecured, it is also banks’ riskiest type of lending.

“Lenders adjust interest rates for two primary reasons: cost and risk,” CardRates’ Sandberg said.

The Federal Reserve Bank of New York’s research shows that credit card charge-offs averaged 3.96% of total balances between 2010 and 2023. That compares to only 0.46% and 0.43% for business loans and residential mortgages, respectively.

As a result, roughly 53% of banks’ annual default losses were due to credit card lending, according to the NY Fed research.

“When you offer a product to everyone you are assuming an awful lot of risk,” Schulz said.

Further, “when times get tough they get tough for most everybody,” he added. “That makes it much more challenging for card issuers.”

The best way to pay off debt

The best move for those struggling to pay down revolving credit card debt is to consolidate with a 0% balance transfer card, experts suggest.

“There is enormous competition in the credit card market,” Sandberg said. Because lenders are constantly trying to capture new cardholders, those 0% balance transfer credit card offers are still widely available.

Cards offering 12, 15 or even 24 months with no interest on transferred balances “are basically the best tool in your toolbelt when it comes to knocking down credit card debt,” Schulz said. “Not accruing interest for two years on a balance is pretty hard to argue with.”

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The 60/40 portfolio may no longer represent ‘true diversification’: Fink

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Andrew Ross Sorkin speaks with BlackRock CEO Larry Fink during the New York Times DealBook Summit in the Appel Room at the Jazz at Lincoln Center in New York City on Nov. 30, 2022.

Michael M. Santiago | Getty Images

It may be time to rethink the traditional 60/40 investment portfolio, according to BlackRock CEO Larry Fink.

In a new letter to investors, Fink writes the traditional allocation comprised of 60% stocks and 40% bonds that dates back to the 1950s “may no longer fully represent true diversification.”

“The future standard portfolio may look more like 50/30/20 — stocks, bonds and private assets like real estate, infrastructure and private credit.” Fink writes.

Most professional investors love to talk their book, and Fink is no exception. BlackRock has pursued several recent acquisitions — Global Infrastructure Partners, Preqin and HPS Investment Partners — with the goal of helping to increase investors’ access to private markets.

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The effort to make it easier to incorporate both public and private investments in a portfolio is analogous to index versus active investments in 2009, Fink said.

Those investment strategies that were then considered separately can now be blended easily at a low cost.

Fink hopes the same will eventually be said for public and private markets.

Yet shopping for private investments now can feel “a bit like buying a house in an unfamiliar neighborhood before Zillow existed, where finding accurate prices was difficult or impossible,” Fink writes.

60/40 portfolio still a ‘great starting point’

After both stocks and bonds saw declines in 2022, some analysts declared the 60/40 portfolio strategy dead. In 2024, however, such a balanced portfolio would have provided a return of about 14%.

“If you want to keep things very simple, the 60/40 portfolio or a target date fund is a great starting point,” said Amy Arnott, portfolio strategist at Morningstar.

If you’re willing to add more complexity, you could consider smaller positions in other asset classes like commodities, private equity or private debt, she said.

However, a 20% allocation in private assets is on the aggressive side, Arnott said.

The total value of private assets globally is about $14.3 trillion, while the public markets are worth about $247 trillion, she said.

For investors who want to keep their asset allocations in line with the market value of various asset classes, that would imply a weighting of about 6% instead of 20%, Arnott said.

Yet a 50/30/20 portfolio is a lot closer to how institutional investors have been allocating their portfolios for years, said Michael Rosen, chief investment officer at Angeles Investments.

BlackRock CEO Larry Fink: Infrastructure will be the largest growing sector in private capital

The 60/40 portfolio, which Rosen previously said reached its “expiration date,” hasn’t been used by his firm’s endowment and foundation clients for decades.

There’s a key reason why. Institutional investors need to guarantee a specific return, also while paying for expenses and beating inflation, Rosen said.

While a 50/30/20 allocation may help deliver “truly outsized returns” to the mass retail market, there’s also a “lot of baggage” that comes with that strategy, Rosen said.

There’s a lack of liquidity, which means those holdings aren’t as easily converted to cash, Rosen said.

What’s more, there’s generally a lack of transparency and significantly higher fees, he said.

Prospective investors should be prepared to commit for 10 years to private investments, Arnott said.

And they also need to be aware that measurement issues with asset classes like private equity means past performance data may not be as reliable, she said.

For the average person, the most likely path toward tapping into private equity will be part of a 401(k) plan, Arnott said. So far, not a lot of companies have added private equity to their 401(k) offerings, but that could change, she said.

“We will probably see more plan sponsors adding private equity options to their lineups going forward,” Arnott said.

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