Hardly a day goes by recently that someone doesn’t say to me, “I’m putting off a decision until the Federal Reserve changes interest rates.”
But I’m quick to remind people that the “rate dominoes” don’t always fall as you may expect. Here are a few things that could happen if the Fed makes a change following its upcoming September meeting.
Home Mortgages
When the Federal Reserve adjusts the Fed Funds Rate, it’s a signal to banks that its monetary policy is charting a new course. In the current business cycle, it would indicate the Fed wants to spark the economy to help create jobs because it’s okay with the rate of inflation. Home mortgage rates could initially adjust following news of a change, but they may continue to change depending on the message from the Fed.
Credit Cards
Consumer loans may also respond to a change in direction by the Fed, but with things like credit cards, it’s best to view any action from the governing body as an overall trend rather than a big cliff. Banks can be expected to respond over time to remain competitive as other credit card companies adjust their rates. However, your existing credit card interest rate may take a few billing cycles to reflect any action from the Fed.
Auto Loans
Auto buyers may benefit if the Federal Reserve adjusts interest rates, but they already received some good news when Congress passed the One Big Beautiful Bill Act (OBBBA) in July. This legislation allows eligible car buyers to deduct up to $10,000 annually in interest paid on qualified auto loans. The new rule runs through 2028, though certain limitations apply. So, even though car loan rates could adjust, the OBBBA may also offer some other incentives worth checking out. For a more comprehensive breakdown of the OBBBA and its potential impact on car buying, check out my recent article here.
What’s Next?
Have you ever heard the phrase, “If ‘ifs’ and ‘buts’ were candy and nuts, we’d all have a Merry Christmas?” It suggests that if wishes came true, everyone would get what they wanted. However, wishing is not a good way to approach personal finances.
Putting off decisions while the Fed deliberates on monetary policy is not always a wise approach—what works best is a proactive strategy that takes into consideration your personal goals and risk tolerance. If you have questions about how your financial plan might be impacted by a change in interest rates, please don’t hesitate to reach out.
1Schwab.com, 2025. “Q3 2025 Trader Client Sentiment Report”