How interest rates have changed over the last 12 months

Inflation is cooling.

Consumer spending continues to be at record highs, while consumer confidence has been trending up. And, after almost two years of rate hikes by the U.S. Federal Reserve, investors are expecting at least a few cuts to interest rates this year.

Their anticipation is understandable: The federal funds rate hasn’t been this high since the early 2000s, and some experts say it seems like the Fed has achieved its goal of a “soft landing,” taming inflation without tipping the economy into a recession.

But consumers looking to borrow money shouldn’t start celebrating just yet, said Greg McBride, chief financial analyst at Bankrate.

“Interest rates took the elevator going up; they’re going to take the stairs coming down,” McBride said.

As the Fed goes into its first Federal Open Market Committee meeting of 2024, here’s what that elevator ride up has looked like over the last 12 months in five major consumer categories: credit cards, savings accounts, certificates of deposit, auto loans and mortgages.

Nowhere has that express rate elevator been more obvious than with credit cards. In March 2022, just before the Federal Reserve started it’s aggressive rate increases, the average rate APR for a credit card in the U.S. was 16.34%, according to Bankrate.

Now, almost two years later, that average is 20.74% — almost 4.5 points higher.

Even as the Fed slowed the pace of increases over the last 12 months, the average APR for credit cards rose more than a full percentage point. And they’ve jumped almost three-tenths of a point since the last rate hike in July.

The bright spot to high interest rates has been for savers, who have finally started seeing bigger rewards for their deposits.

In the last 12 months, the average rate for savings accounts at retail banks has more than doubled, from 0.22% to 0.52%, according to Bankrate.

That average was closer to 0.06% at the beginning of the Fed’s tightening cycle in March 2022.

But the savviest savers can find rates much higher than that, McBride said.

“The number that savers should be focusing on is actually 10 times higher than that average,” he said. “The top yielding savings accounts are paying well over 5%. Federally insured, available nationwide. You can get to your money when you need it. And many of them are available with no minimum deposit.”

A lot of these are online, high-yield savings accounts that you can open on your smartphone. These accounts can be smart for emergency savings that allow consumers to get their money quickly in a pinch.

For savers who don’t quick access to their money and can lock in their deposit for longer periods, the time to get a certificate of deposit is now, McBride said.

The average rate for a 12-month CD has jumped almost six-tenths of a percentage point in the last 12 months, but those rates likely won’t be around for much longer.

“CD yields have peaked,” McBride said. “They’ve already started to ease back, and that’s going…