The Federal Reserve is poised to make its third interest rate cut of the year on December 10 (87% probability). Exactly what impact such a move will have on consumers’ wallets and the economy more broadly remains to be seen, but we can project that a 25-basis-point cut will save credit card users roughly $1.93 billion in interest over the next 12 months.
Below, you can find everything you need to know about how Federal Reserve rate cuts affect consumers. WalletHub also conducted a nationally representative survey to gauge public sentiment about declining rates.
Fed Rate Cut Probability
There is an 87% chance of the Fed reducing its target interest rate by 25 basis points in December 2025.
Fed Rate Cut Probability
Source: CME Group
Fed Rate Cut Impact by Loan Type
Interest rates on financial products, from credit cards to car loans and mortgages, are generally based on some sort of benchmark rate, which in turn is influenced by the Federal Reserve’s target interest rate in one way or another. So when the Fed’s target rises or falls, the interest rates consumers pay, and the overall cost of borrowing do too. Unfortunately, the rates we earn on deposit accounts aren’t nearly as quick to react.
Below, you can see how Fed interest rate changes have impacted consumers’ finances in the past, as well as how much we can expect an December 2025 rate cut to influence us.
Credit Cards:
The vast majority of credit card rates are variable, tied to the Prime Rate. As a result, we expect to see credit card rates decrease the same amount as the Fed’s target, which is exactly what we observed with the September rate cut.
- A 25-basis-point decrease (87% probability) will save credit card users at least $1.93 billion in interest over the next 12 months.
- For historical context, due to the 525 basis points in Federal Reserve rate hikes from March 2022 to July 2023, credit card users were set to pay over $40 billion more in interest during 2024 than they would have otherwise.
Mortgages:
- We don’t expect much of a change in mortgage rates following an December rate cut, as the mortgage markets have already accounted for the move. That’s because mortgages have fixed rates that are priced with a far longer time frame in mind than other borrowing vehicles.
- WalletHub’s analysts estimate that the upcoming December rate cut has decreased the cost of new mortgages by around 11 basis points, which translates to roughly $10,080 over the life of a 30-year loan, assuming the average home loan of $381,404.
Auto Loans:
- WalletHub expects the average APR on a 48-month new car loan to drop by around 18 basis points in the months following the Fed’s 25-basis-point rate cut.
- For historical context, the average APR on a 48-month new car loan rose from 4.87% in February 2022 to 7.51% in August 2025 (the most recent data available). That’s a 264-basis-point increase in a period characterized by 525 basis points in Fed rate hikes and 125 basis points in Fed rate cuts.
Deposit Accounts:
- WalletHub expects little, if any, change in the APYs available from most deposit accounts following the Fed’s rate cut. Yields did not rise much following rate hikes, and they’re already at quite low levels historically.
- Online savings accounts did react to previous Fed rate hikes, with yields increasing by an average of 329 basis points from January 2022 to August 2024 (525 basis points in Fed hikes during that period). Following a trio of 25-basis-point rate cuts in December 2024, September 2025 and October 2025, yields have decreased by 52 basis points. Yields on branch-based checking accounts have increased by 31 basis points since December 2024.
Interest Rate Change Since December 2024 Fed Rate Cut
The Federal Reserve has increased its target rate 11 times since March 2022, with only five decreases: in September, November and December 2024, as well as September and October 2025.
December Fed Rate Survey
WalletHub conducted a nationally representative survey of 400 respondents to see what people know about Federal Reserve interest rate changes and how they impact our wallets. The survey was conducted online on September 29 and December 3. You can find the complete results below.
Key Stats
- Americans Upset By Rate Cuts: 65% of Americans feel indifferent or upset about the Fed cutting interest rates.
- Inflation Remains a Concern: More than 9 in 10 people think inflation is still an issue.
- Inflation Outweighs Employment Concerns: 2 in 3 people think inflation is a bigger issue than the job market right now.
- Economic Erosion: More than 3 in 5 people think the economy is getting worse rather than improving.
- Trust in Economic Data Is Low: 59% of people say they don’t trust economic data from the government.
- Money Loss Trumps AI Fear: 74% of Americans are more worried about inflation stealing their money than AI stealing their job.
Full Survey & Responses
| Is inflation still an issue? | |
|---|---|
| Yes | 93% |
| No | 7% |
| How do you feel about the Fed cutting interest rates? | |
| Indifferent | 44% |
| Happy | 35% |
| Upset | 22% |
| Do you think the economy is improving or getting worse? | |
| Getting worse | 61% |
| Improving | 39% |
| How good of a job has the Fed done taming inflation? | |
| OK | 40% |
| Bad | 40% |
| Good | 20% |
| What do you think is a bigger issue right now? | |
| Inflation | 66% |
| Job market | 34% |
| Will a quarter-point rate cut by the Fed make a difference in your life? | |
| No | 60% |
| Yes | 40% |
| Do you trust economic data from the government? | |
| No | 59% |
| Yes | 41% |
| Which are you more worried about? | |
| Inflation stealing your money | 74% |
| AI stealing your job | 26% |
| Is it hard to find a job right now? | |
| Yes | 62% |
| No | 38% |
| Is it a good time to borrow? | |
| No | 75% |
| Yes | 25% |
Note: Percentages may not total 100% due to rounding.
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