What that means for you

The Federal Reserve announced Wednesday it will leave interest rates unchanged. Fresh inflation data issued earlier in the day showed consumer prices are gradually moderating though remain above the central bank’s target.

The Fed’s benchmark fed funds rate has now stood at 5.25% to 5.50% since last July.

For consumers already strained by the high cost of living, there is an added toll from persistently high borrowing costs.

“It’s not enough that the rate of inflation has come down,” said Greg McBride, chief financial analyst at Bankrate.com. “Prices haven’t, and that is what is really stressing household balances.”

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Inflation has been a persistent problem since the Covid-19 pandemic, when price increases soared to their highest levels since the early 1980s. The Fed responded with a series of interest rate hikes that took its benchmark rate to its highest level in decades.

The federal funds rate, which is set by the U.S. central bank, 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.

The spike in interest rates caused most consumer borrowing costs to skyrocket, and now, more Americans are falling behind on their payments.

From credit cards and mortgage rates to auto loans and student debt, here’s a look at where those monthly interest expenses stand.

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 nearly 21% today — near an an all-time high.

“Consumers need to understand that the cavalry isn’t coming anytime soon, so the best thing you can do is take things into your own hands when it comes to lowering credit card interest rates,” said Matt Schulz, chief credit analyst at LendingTree.

Try calling your card issuer to ask for a lower rate, consolidating and paying off high-interest credit cards with a lower-interest personal loan or switching to an interest-free balance transfer credit card, Schulz advised.

Although 15- and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

The average rate for a 30-year, fixed-rate mortgage is just above 7%, up from 4.4% when the Fed started raising rates in March 2022 and 3.27% at the end of 2021, according to Bankrate.

“Going forward, mortgage rates will likely continue to fluctuate and it’s impossible to say for certain where they’ll end up,” noted Jacob Channel, senior economist at LendingTree. “That said, there’s a good chance that we’re going to need to get used to rates above 7%…