What does that mean for you?

The Fed is expected to cut interest rates by another quarter point on December 18 at the end of its two-day meeting. This would mark the third straight rate cut – all together cutting a full percentage point off the federal funds rate since September.

So far, the central bank has moved slowly while resetting policy after quickly raising interest rates when inflation reached a 40-year high.

“This could be the last cut for a while,” said Jacob Channel, chief economic analyst at LendingTree.

The channel said the Fed may choose to take a “wait and see approach” because there is some uncertainty about President-elect Donald Trump’s financial policy when he begins his second term.

At the same time, higher interest rates have affected all types of consumer borrowing costs, from car loans to credit cards.

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The federal funds rate, set by the U.S. central bank, is the rate at which banks borrow and lend to each other overnight. Although this is not the rate that consumers pay, the Fed's moves still affect the borrowing and saving rates that consumers see every day.

The December cut could cut the overnight borrowing rate by a quarter of a percentage point, or 25 basis points, to a range of 4.25% to 4.50% from its current range of 4.50% to 4.75%.

That “will provide some margin of relief for financial pressures,” but not across the board, said Brett House, an economics professor at Columbia Business School.

“Some of the most important interest rates that people face don't compare to the federal funds rate,” he said.

From credit cards to car loans to mortgages, here's the breakdown of how it works:

Since most credit cards have a variable interest rate, there is a direct connection to the Federal Reserve Bank's standard. In the wake of the rate hike cycle, the average credit card rate has risen from 16.34% in March 2022 to 20.25% today, according to Bankrate — near an all-time high.

Although the central bank began cutting interest rates in September, the average interest rate on credit cards has barely budged. Card issuers are often slower to respond to Fed cuts than to increases, said Greg McBride, chief financial analyst at Bankrate.

“The rate will go down a step but with a time lag of up to three months,” McBride said.

The best move for those with credit card debt is to switch to a 0% balance transfer credit card and pay the balance aggressively, he said.

“Interest rates will not fall fast enough to do the heavy lifting for debt-laden consumers,” he said.

Because interest rates on 15- and 30-year mortgages are fixed and mostly tied to Treasury yields and the economy, they are not in line with Fed policy. Since most people have fixed-rate mortgages, the interest rate will not change unless they refinance or sell their current home and purchase another property.

As of the week ending Dec. 6, the average rate for a 30-year fixed-rate mortgage was 6.67%, according to the Mortgage Bankers Association.

These rates are down somewhat from the previous month, but are well above the 2024 low of 6.08% in late September.

“Going forward, mortgage rates are likely to continue to fluctuate on a weekly basis and it is impossible to say with certainty where they will end up,” the channel said.

Fixed car loans. However, payments have become larger due to rising car prices resulting in lower monthly payments.

The average interest rate on a five-year new car loan is now about 7.59%, according to Bankrate.

While anyone planning to finance a new car could benefit from lower interest rates in the future, the Fed's next move won't have any material impact on what you get, Bankrate's McBride said. “Sticker prices are high and the amounts borrowers are financing are very high” — about $40,000 on average, he said.

“Even at very low prices, this represents a budget-busting monthly payment,” he said.

Interest rates on federal student loans are also fixed, so most borrowers will not be immediately affected by interest rate cuts. However, if you have a private loan, these loans may be fixed or have a variable rate tied to the Treasury bill or other rates, which means that as the Fed lowers interest rates, interest rates on private student loans will decrease as well.

Eventually, borrowers with variable-rate private student loans may be able to refinance to a less expensive fixed-rate loan, according to higher education expert Mark Kantrowitz.

However, he said refinancing a federal loan into a private student loan would give up the safety nets that come with federal loans, “such as deferment, forbearance, income-based repayment, loan forgiveness and discharge options.”

Additionally, extending the loan term means you'll end up paying more interest on the balance.

While the central bank has no direct influence on deposit interest rates, returns tend to be tied to changes in the target federal funds rate.

As a result of the Federal Reserve's series of interest rate hikes in recent years, higher-yield online savings accounts have offered the best returns in decades and still pay close to 5%, according to McBride.

“This is still a good time to save and a good time to make money,” he said. “The most competitive offers are still ahead of inflation and that is likely to continue.”

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