- Does the Fed set mortgage rates?
No. The Fed sets one short-term rate, now 3.75%–4.00%; lenders price mortgages from bond yields and their own margin. What a Fed move does and does not change for a mortgage. - Do Fed rate cuts lower credit card rates?
Usually yes, for variable-rate cards: card rates follow the prime rate, which follows the Fed (prime is 7.00% now by convention). What a 25 basis point cut does to a balance. - Fed funds rate vs prime rate: what is the difference?
The fed funds rate is 3.75%–4.00%; the prime rate, which cards and credit lines use, is 7.00%: 3 points above the top of the Fed's range, by convention. How they differ.
The short version
- A fixed-rate mortgage is priced from long-term bond yields and the lender’s margin, so it can move before the Fed does, or the other way. A fixed rate you already hold never changes when the Fed moves.
- An adjustable-rate mortgage or a home equity line resets from an index such as the prime rate, so it follows the Fed at its next reset, up to its cap.
- A credit card usually has a variable rate: the prime rate, now 7.00% (three points above the top of the Fed’s range, 3.75%–4.00%), plus the issuer’s margin. It follows a Fed move within a billing cycle or two.
- Savings rates tend to follow the Fed more slowly than loan rates do, and fixed-term savings keep their rate until they mature; the guide to what happens when the Fed raises or cuts goes through it.
For every cut and hike, see Fed rate cuts since 2008. These pages are general information, not advice.