Interest rates are moving based on Federal Reserve decisions, not rising or falling on their own

Whether interest rates are rising depends on which rates you mean and which month you're looking at. The federal funds rate—the rate the Federal Reserve sets for banks to lend to each other overnight—has moved up and down over the past few years. Mortgage rates, credit card rates, and savings account rates all follow different paths based on that federal rate, but they don't move in lockstep with it.

The Federal Reserve raised its benchmark rate from near zero in early 2022 through mid-2023, which pushed most consumer rates higher. Since then, the Fed has held steady or made small cuts. But what matters to you is what your bank or lender is charging right now, not what happened last year. That number changes based on the product, the lender, your credit score, and market conditions on the day you check.

The clearest way to know if rates are rising or falling for the product you care about is to check the actual current rate from the source offering it—your bank, a mortgage lender, a credit card company—and compare it to what you saw a week or a month ago.

Key Takeaways

  • The Federal Reserve's benchmark rate and consumer rates like mortgages and credit cards are not the same thing, and they don't always move together.
  • Mortgage rates, savings rates, and credit card rates each respond to different market forces and can move in different directions at the same time.
  • The only reliable way to know if rates are rising for your situation is to check the current rate from your lender or bank and compare it to recent weeks.
  • Your personal rate depends on your credit score, the loan term, the lender's own pricing, and current market conditions—not just the Federal Reserve's decision.

How the Federal Reserve's rate affects what you pay

The Federal Reserve sets a target range for the federal funds rate, which is the interest rate banks charge each other for overnight loans. This is not a rate you pay directly. Instead, it acts as a floor that influences other rates in the economy.

When the Fed raises its target range, banks tend to raise the rates they charge customers on credit cards, home equity lines of credit, and adjustable-rate mortgages. Savings account rates and money market rates often rise too, because banks need to offer more to attract deposits. Fixed-rate mortgages and auto loans respond more slowly and less predictably, because they're priced based on what lenders expect future rates to do, not just what the Fed did today.

The Fed's most recent moves matter less than what the market expects the Fed to do next. If traders believe rates will fall in six months, mortgage rates may drop even if the Fed hasn't moved yet. If traders expect rates to stay high, mortgage rates may stay elevated even after the Fed cuts.

Why your mortgage rate and your credit card rate move differently

A mortgage lender locks in your rate for 15 or 30 years and takes the risk that rates will move against them. They price that risk into your rate based on what they think will happen to long-term interest rates. A credit card company can change your rate whenever they want (usually with 15 days' notice), so they price in less long-term risk and respond more directly to the Fed's moves.

Savings account rates are set by individual banks and can change daily. Some banks raise savings rates quickly when the Fed moves; others lag by weeks or months. A money market account at one bank might pay 4.5% while the same account at another bank pays 3.8%, even on the same day.

This means you can see mortgage rates fall while credit card rates stay flat, or savings rates rise while mortgage rates drop. There is no single "interest rate" that rises or falls—there are dozens, and they move on their own schedules.

What to check if you want to know the current rate for something specific

If you're shopping for a mortgage, check rates from at least three lenders on the same day. Rates change daily and sometimes multiple times per day. Write down the rate, the points (if any), the loan term, and the date. A rate from two weeks ago is not useful for comparison.

For credit cards, log into your account and look at your current APR. If you're considering a new card, the rate offered depends on your credit score and the card's terms. Rates advertised online are usually the best-case scenario for people with excellent credit.

For savings accounts, visit your bank's website or call and ask the current rate on the specific account type you're interested in. Rates posted online can be outdated. If you're comparing banks, get the rate from each one on the same day.

How your credit score affects the rate you're offered

Even when the Fed holds rates steady, your personal rate can rise or fall based on your credit score. A lender might offer 6.5% to someone with a 750 credit score and 7.2% to someone with a 650 score, on the same day, for the same loan type.

If your credit score dropped since the last time you borrowed, you may be offered a higher rate even if the Fed's benchmark rate hasn't changed. If your score improved, you may may have access to for a lower rate. This is why checking your credit report for errors before you shop for a loan matters—an error that lowers your score can cost you real money in interest.

The difference between fixed and variable rates

A fixed rate stays the same for the entire loan or account term. Your mortgage rate, if it's fixed, will not change for 15 or 30 years, even if the Fed raises rates to 10%. A fixed-rate loan protects you from future rate increases but usually starts higher than a variable rate.

A variable rate changes based on a benchmark (usually the Fed's rate or the prime rate) plus a margin set by the lender. An adjustable-rate mortgage might be 5.5% for the first five years, then adjust every year after that based on the Fed's current rate. If the Fed raises rates, your payment goes up. If the Fed cuts rates, your payment goes down.

Variable rates are cheaper upfront but riskier if rates rise. Fixed rates cost more initially but give you certainty. Which one is better depends on how long you plan to keep the loan and how much rate risk you can handle.

Where to find current rates for comparison

The Federal Reserve publishes historical data on the federal funds rate on its website (federalreserve.gov), updated weekly. This shows you what the Fed has done, but not what your lender will charge you.

For mortgage rates, check Freddie Mac's Primary Mortgage Market Survey (published weekly) or call lenders directly for current quotes. For credit card rates, visit the card issuer's website or call their customer service line. For savings rates, check your bank's website or use a rate comparison site, but verify the rate by calling the bank directly before opening an account.

None of these sources will tell you whether rates are "rising" in a way that matters to your decision. What matters is the rate you can get today for the specific product you need, compared to rates from other lenders on the same day.

Frequently Asked Questions

If the Fed cuts rates, will my mortgage rate go down?

Not necessarily. Mortgage rates are priced based on what lenders expect future rates to do, so they often move before the Fed acts. Your mortgage rate might have already fallen in anticipation of a cut, or it might stay flat if the market expected a bigger cut. Fixed-rate mortgages don't move with the Fed's rate the way credit cards do.

Why is my credit card rate higher than the prime rate?

Credit card companies add a margin on top of the prime rate (usually 10 to 20 percentage points) to cover their costs and risk. The prime rate is what banks charge each other; your rate includes the bank's profit, fraud losses, and the cost of running the card program. A higher credit score usually means a lower margin, but the base margin is always there.

Can I lock in a rate before the Fed makes a decision?

Yes, if you're getting a mortgage or refinancing. Most lenders let you lock a rate for 30 to 60 days while your loan is being processed. If rates drop during that time, you can usually renegotiate. If rates rise, you keep your locked rate. For credit cards and savings accounts, there is no lock-in—rates can change at any time.

How often do banks change savings account rates?

Banks can change savings rates whenever they want, with no notice required. Some banks change rates daily; others change them weekly or monthly. If you're earning interest on savings, check your rate every few weeks. If it drops significantly and other banks are paying more, moving your money to a higher-paying account takes a few days.

What does it mean when the news says rates are "expected to rise"?

It means traders and economists believe the Federal Reserve will raise its benchmark rate at an upcoming meeting. This expectation often causes mortgage rates and other long-term rates to rise before the Fed actually moves, because lenders adjust their prices based on what they think will happen next. The actual Fed decision may or may not match the expectation.