Interest rates are higher than they were five years ago, but they've stopped climbing

The Federal Reserve raised its benchmark interest rate from near zero in 2022 through mid-2023, pushing rates on mortgages, car loans, credit cards, and savings accounts higher across the board. Since mid-2023, the Fed has held rates steady, and in late 2024 began lowering them slightly. Where rates sit today depends on the type of loan or account you're looking at, and they change week to week based on market conditions and Fed decisions.

If you're shopping for a mortgage, car loan, or credit card, the rate you see will be higher than it was in 2020 or 2021, but lower than the peak rates of 2023. If you're saving money in a high-yield savings account, you're earning more interest than you would have a few years ago—but those rates are also starting to decline as the Fed cuts. The practical takeaway: now is a reasonable time to lock in a mortgage or refinance an existing loan if rates drop further, but it's also a good moment to move savings into a high-yield account before those rates fall more.

Key Takeaways

  • Mortgage rates, auto loan rates, and credit card rates are all higher than they were in 2020 and 2021, but have stopped rising and begun to fall slightly.
  • Savings account interest rates have climbed from nearly zero to 4% to 5% at many online banks, though these rates are beginning to decline as the Fed cuts.
  • The Federal Reserve controls the benchmark rate, but individual banks set their own rates based on that benchmark and their own lending standards.
  • Your personal rate depends on your credit score, income, debt, and the lender you choose—two people applying for the same mortgage on the same day may receive different rates.

Why rates rose and where they are now

The Federal Reserve raised its benchmark interest rate starting in March 2022 to fight inflation, which had climbed to levels not seen since the early 1980s. The Fed kept raising rates through June 2023, reaching a range of 5.25% to 5.50%. This pushed up rates on everything consumers borrow: mortgages, car loans, personal loans, and credit cards all became more expensive.

From mid-2023 through 2024, the Fed held rates steady, then began cutting them in September 2024. Those cuts have been gradual—the Fed typically moves in quarter-point increments—and rates remain well above where they were before 2022. A 30-year fixed mortgage that cost 3% in 2021 now hovers around 6% to 7%, depending on the week and the lender. Credit card rates, which follow the Fed more closely, have climbed from around 16% to over 20% at many issuers.

Current mortgage rates and what affects yours

A 30-year fixed mortgage rate typically ranges from 6% to 7% right now, though this shifts weekly based on bond market conditions and Fed announcements. A 15-year fixed mortgage is usually about 0.5% to 1% lower. Adjustable-rate mortgages (ARMs) start lower but reset after a fixed period, so they carry more risk if rates stay high or rise again.

Your actual rate depends on your credit score, down payment size, debt-to-income ratio, the property location, and the lender. A borrower with a 750 credit score and 20% down will receive a better rate than someone with a 650 score and 5% down. Shop with at least three lenders—a bank, a credit union, and a mortgage broker—because the difference between their rates can save or cost you tens of thousands over the life of the loan.

Auto loan rates and credit card rates

New car loan rates range from around 5% to 8% depending on the lender and your credit. Used car loans are typically 1% to 2% higher. Like mortgages, your rate depends on your credit score and the lender's standards. Credit unions often offer lower rates than banks for auto loans if you're a member.

Credit card rates have climbed to 20% to 25% at most major issuers and are unlikely to fall much even if the Fed cuts further, because credit card rates are set by individual companies and don't track the Fed as closely as mortgage or auto loan rates do. If you carry a balance, the interest you're paying is substantially higher than it was in 2021. Paying down the balance or moving it to a 0% balance-transfer card (if you may have access to) can save hundreds in interest.

Savings account and CD rates

High-yield savings accounts at online banks currently pay 4% to 5% annual interest, a dramatic jump from the near-zero rates of 2021 and 2022. Money market accounts and certificates of deposit (CDs) offer similar or slightly higher rates depending on the term. These rates began declining in late 2024 as the Fed cut its benchmark rate, and they will likely continue to fall if the Fed cuts further.

If you have cash sitting in a traditional savings account earning 0.01%, moving it to a high-yield account or a CD will earn you hundreds of dollars per year on a $10,000 balance. CDs lock your money away for a set period (three months to five years), but they may provide a fixed rate for that entire period, so they protect you if rates fall further. High-yield savings accounts let you withdraw anytime without penalty, so they're more flexible if you need access to the money.

How the Fed's decisions affect your rates

The Federal Reserve doesn't set mortgage, auto loan, or credit card rates directly. Instead, it sets the federal funds rate—the rate banks charge each other for overnight loans. Banks use this as a benchmark and add their own margin on top, which is how a mortgage ends up at 6.5% when the Fed's rate is 4.5%.

When the Fed raises its rate, banks eventually raise their rates on new loans and credit cards. When the Fed cuts, banks typically cut their rates on new loans, but they cut savings account rates faster than they cut borrowing rates, which is why your savings rate falls more quickly than your mortgage rate would if you refinanced. The Fed meets eight times per year to decide whether to raise, cut, or hold rates steady. You can watch for these announcements and use them as a signal for whether to lock in a mortgage rate or move savings into a CD.

Should you lock in a rate or wait

If you're buying a home or refinancing a mortgage, rates are higher than they were in 2020 but lower than they were in 2023. Whether to lock in now depends on your timeline and risk tolerance. If you're closing within 30 days, locking in protects you from rates rising further during that period. If you're not closing for several months, you're betting that rates will fall—which is possible if the Fed cuts more, but not certain.

For savings, the math is clearer: move money into a high-yield account or CD now rather than waiting. Rates are declining, so the longer you wait, the lower the rate you'll receive. A 5% CD locked in for two years guarantees that return even if rates fall to 2%. A high-yield savings account at 4.5% is still better than 0.01%, and you can move the money if rates rise (though that's unlikely in the near term).

Frequently Asked Questions

Will interest rates go down more in the next year?

The Fed may cut rates further if inflation continues to fall, but there's no may provide. Economic conditions change, and the Fed adjusts based on employment, inflation, and other factors. Rather than trying to predict the Fed, focus on locking in rates that work for your situation now—a 6.5% mortgage is still reasonable if you plan to stay in the home for seven years or more.

Why is my credit card rate so much higher than my mortgage rate?

Credit card companies set their own rates and don't have to follow the Fed as closely as mortgage lenders do. Credit cards are unsecured debt (the bank has no collateral if you don't pay), so they carry higher risk and higher rates. Mortgages are secured by the house, which is why they're cheaper to borrow against.

Is now a good time to refinance my mortgage?

If your current rate is 7% or higher and you plan to stay in the home for at least five more years, refinancing to 6% or 6.5% could save you money. Calculate the break-even point by dividing the refinancing costs by your monthly savings—if you save $200 per month and refinancing costs $3,000, you break even in 15 months. If you might move sooner, refinancing may not be worth it.

Should I move my savings to a high-yield account right now?

Yes. Even if rates fall further, 4% is far better than 0.01%, and you lose nothing by moving the money. High-yield accounts have no fees and let you withdraw anytime. The only reason not to move is if you need the money within three months—in that case, a high-yield savings account is still better than a CD because you won't be locked in.

How often do interest rates change?

The Fed meets eight times per year to set its benchmark rate. Mortgage rates and auto loan rates change weekly based on bond market conditions and Fed expectations, even on weeks when the Fed doesn't meet. Credit card rates and savings rates change less frequently but can shift after a Fed announcement.