> Interest Rates Explained: Plain-Language Answers
> Source: https://interestratedecision.com/explainers/ · Content last changed: 2026-11-12
> InterestRateDecision.com: free to quote with a link to the page above.

Plain answers to how the Fed's rate (now 3.75%–4.00%) reaches mortgages, credit cards and savings, with the arithmetic from the site's own calculators.

# Interest rates explained

Plain answers to the questions a borrower or saver asks when the Fed moves. The Fed’s rate is 3.75%–4.00% today; these pages show how far it reaches into a mortgage, a card and a savings account, with worked examples from the [calculator](https://interestratedecision.com/rate-cut-calculator/).

-   [**Does the Fed set mortgage rates?**](https://interestratedecision.com/explainers/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?**](https://interestratedecision.com/explainers/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?**](https://interestratedecision.com/explainers/fed-funds-rate-vs-prime-rate/)  
    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](https://interestratedecision.com/what-happens-when-the-fed-raises-or-cuts-rates/) goes through it.

For every cut and hike, see [Fed rate cuts since 2008](https://interestratedecision.com/fed/rate-cuts/). These pages are general information, not advice.

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