Fed bucks Trump's pressure for rate cut; who are the biggest winners and losers?
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Fed bucks Trump's pressure for rate cut; who are the biggest winners and losers?
Yahia Barakah July 30, 2025 at 8:09 PM
Biggest winners and losers of Fed rate decisions (miniseries via Getty Images)
The Federal Reserve just announced its decision to hold its benchmark rate steady at 4.25% to 4.50% for the fifth straight time — despite mounting pressure from President Trump on Fed Chair Powell to lower rates and two committee members who wanted a quarter-point cut at today's meeting.
Fed Chair Jerome Powell and his colleagues cited mixed signals. U.S. economic growth slowed in the first half of 2025, and inflation stayed "somewhat elevated" above its 2% target while unemployment remained low. The decision reflects the Fed's cautious approach amid what it called "elevated uncertainty about the economic outlook."
This decision affects your money in several real ways. Your savings account rates, mortgage costs, credit card payments and investment portfolio all respond differently to rate changes. Let's break down exactly how today's hold impacts your wallet.
In this article
Biggest winners when the Fed holds its rate steady
Biggest losers when the Fed holds its rate steady
Biggest winners when the Fed cuts its rate
Biggest losers when the Fed cuts its rate
How the Federal Reserve makes its rate decisions
There's no single person responsible for the Federal Reserve's decisions. Instead, the Federal Open Market Committee (FOMC) announces federal funds rate targets based on votes from 12 people, which includes the seven members of the Federal Reserve Board of Governors, the president of the New York Federal Reserve Bank, and four regional Fed presidents who rotate in and out on a yearly basis.
The FOMC holds eight meetings per year, each spanning two days, where committee members review economic data, discuss policy options and vote on interest rate changes. The committee announces its policy decisions at the end of each meeting, followed by a press conference led by the Federal Reserve Chair.
The Fed considers multiple economic factors when making rate decisions, including inflation trends, employment data, economic growth and potential policy impacts. The central bank can raise, lower or hold rates steady to support its dual mission of reducing inflation to 2% and maximizing employment.
What to expect from the Federal Reserve in 2025
The Fed faces a tricky balancing act. Inflation jumped back up to 2.7% in June after jumping to 2.3% in May — not exactly the smooth path down to the 2% target the Fed was hoping for.
Meanwhile, Trump's trade policies create uncertainty that makes it tough to predict whether tariffs will spike prices or slow economic growth. That's why the Fed has been taking a "wait-and-see" approach to allow the time needed to gain clearer visibility on how these shifting trade and geopolitical tensions will affect the economy.
That said, the CME FedWatch tool shows many analysts still expect at least one rate cut before the end of the year, with most economists putting the next likely cut in September.
Biggest winners when the Fed holds its rate steady1. High-yield savers
Many online banks still offer annual percentage yields (APYs) above 4.00%. These yields, which are influenced by the Fed rate, reflect how much your money grows in a year. A Fed hold gives you extra time to earn higher interest before any potential cuts.
You'll find these attractive yields in high-yield savings accounts at online banks. Traditional giants like Chase or Bank of America often offer just 0.01% APY, weighed down by the cost of maintaining brick-and-mortar branches. Online banks avoid those expenses and pass the savings on to you in the form of higher interest and fewer fees.
This includes online institutions like Bread Financial, SoFi and Discover that charge $0 monthly fees and have no minimum balance requirements. The longer rates hold steady, the more your interest compounds — meaning you earn interest on your interest.
💡Smart move: Use rate pause periods to open a high-yield savings account and benefit from its rates. Compare current offerings across multiple online banks and consider moving money from your traditional savings accounts to high-yield alternatives.
2. CD shoppers
Certificates of deposit (CDs) are like savings accounts with a time commitment. You agree to leave your money untouched for a specific period, typically ranging from three months to five years, and the bank guarantees you a fixed interest rate that won't change for that entire time.
During pause periods, you can take time to build a CD ladder without worrying about missing out on higher rates tomorrow. Simply split your money across multiple CDs with different maturity dates. Instead of putting $20,000 into one five-year CD, you could put $5,000 each into CDs that mature in six, nine, 12, and 24 months. This gives you access to some money regularly while still locking in your rates and earning more than regular savings accounts.
💡Smart move: During a rate hold period, consider moving money you won't immediately need into CDs. When each CD matures, evaluate the rate environment before reinvesting: if rates appear likely to rise, roll into shorter terms (three to six months) to capture future increases. If rates seem likely to fall, lock into longer terms (two to five years) to maintain current yields.
3. Mortgage shoppers
Stable lending conditions help both homebuyers and people considering refinancing their existing mortgages. While rates may not get much better during pauses, they also won't get much worse, giving you consistent conditions for major financial decisions.
Rate pauses eliminate the stress of trying to time your purchase around Federal Reserve meetings. You can focus on finding the right home and negotiating the best deal without worrying about rates jumping before you close on the loan. Refinancing candidates get time to properly evaluate multiple lenders, compare terms and calculate break-even points without rates moving around constantly.
💡Smart move: During rate pauses, focus on shopping for different mortgage options rather than trying to time rate changes. Get quotes from at least three different lenders and negotiate fees to find the best total cost of borrowing, not just the lowest rate.
Biggest losers when the Fed holds its rate steady1. Rate watchers
If you've been holding off on major financial moves hoping rates would drop, Fed pauses can feel frustrating. Whether you've been delaying a home purchase or putting off refinancing while waiting for cheaper borrowing costs, extended pauses push potential rate savings further out of reach.
Business owners feel this pinch too. If you've been planning expansion based on expected rate cuts, you might need to revise your strategy to account for higher loan costs or delayed equipment purchases or facility expansions.
💡Smart move: Don't postpone important financial decisions based on Federal Reserve speculation. If you need to refinance, buy a home or make major purchases, focus on finding the best available terms today rather than waiting for potentially better conditions that may never come.
2. Variable-rate borrowers
Extended pauses in a high-rate environment trap people with variable-rate debt at elevated costs when they should be benefiting from the flexibility these loans typically offer. People with adjustable-rate mortgages (ARMs), home equity lines of credit (HELOCs) and business owners with variable-rate commercial loans all face this challenge.
These loans often carry rates tied directly to the "prime rate," which banks charge their best customers and typically sits about 3% above the Fed rate. So if you have a HELOC at prime plus 1%, you're currently looking at about 8.5% — significantly higher than what many people got used to in recent years.
💡Smart move: Consider fixed-rate borrowing options such as personal loans or home equity loans. If you have an ARM, you can also explore refinancing it into a fixed-rate mortgage if the numbers work in your favor.
Biggest winners when the Fed cuts its rate1. Stock market investors
When borrowing money becomes cheaper, companies can expand operations, upgrade equipment, and hire workers more affordably, which may lead to higher profits and stock prices over time.
Growth stocks and technology companies often see the biggest boosts because their stock prices depend heavily on future earnings. When interest rates drop, those future earnings become more valuable in today's dollars.
Additionally, as savings account yields drop following a rate cut, many people move money from cash into stocks to seek better returns. This can drive additional money into stock markets, potentially boosting prices across multiple sectors.
💡Smart move: Don't dramatically shift your entire portfolio chasing rate-cut rallies. Instead, gradually grow your stock portfolio if you're holding too much cash by using a tested-and-true investment strategy such as dollar-cost averaging. Use robo-advisors to automate the entire process or make gradual contributions to a diversified fund using a trustworthy investment platform.
2. Homeowners and homebuyers
Rate cuts bring welcome news for anyone dealing with mortgages. While mortgage rates are influenced by many factors and don't move exactly with Fed decisions, lending costs generally ease when the Federal Reserve reduces rates.
Homeowners with adjustable-rate mortgages (ARMs) see the impact without needing to refinance. That’s because ARM rates can change over time, unlike a fixed-rate mortgage where your rate stays the same for 30 years. ARMs typically adjust annually based on interest rate benchmarks that respond to some degree to the Fed policy.
💡Smart move: If you have an ARM, review your loan documents to understand exactly how your rate adjustments take place. For fixed-rate mortgage holders, monitor rates but don't rush to refinance unless you can reduce your rate, secure better repayment terms or get rid of private mortgage insurance.
3. Credit card borrowers
If you're carrying credit card debt, a Fed rate cut may eventually bring some relief, though you'll need patience to see changes in your statements after cuts actually occur. While credit card annual percentage rates (APRs) typically react to movements in the Fed’s benchmark rate, the timing of those reactions varies.
Credit card issuers often take their time lowering APRs after a Fed cut. This differs from their typically speedier approach to Fed rate hikes, which they generally implement in one or two billing cycles. Credit card companies carefully monitor their profit margins, which means they might not quickly pass along these interest savings.
The timing gap matters because credit card rates remain near historic highs, with average rates still above 21%. When the Fed cuts rates, credit card rates may decline gradually, and relief for borrowers could take months to materialize.
💡 Smart move: Rather than waiting for your card issuer to lower your APR, take control of your debt by exploring balance transfer credit cards that offer lengthy 0% intro APR periods. Some of the best options offer 0% intro APR on balance transfers for 18 months or more, including the Wells Fargo Reflect and Citi Double Cash. Just be sure to pay off your balance before the introductory period ends.
4. Borrowers with high-rate loans
Fed rate cuts may give you a reason to replace your higher-rate loan with a lower-cost alternative. For example, if you took out a personal loan at 12% APR when rates were higher, significant enough Fed rate cuts might let you qualify for a new loan at 10% APR. This would reduce your monthly payments and total interest costs.
Auto loans could also be worth refinancing after a number of Fed rate cuts. This is especially true if your credit score has improved since you first bought your car. The key is shopping around with multiple lenders since different companies respond to rate changes at different speeds and offer varying terms.
💡Smart move: Calculate refinancing break-even points before applying. Factor in all costs, including origination fees and any prepayment penalties on your existing loan. Only refinance if the total interest savings justify the hassle and cover these costs.
Biggest losers when the Fed cuts its rate1. High-yield savers
Banks typically move faster to cut the rates they pay depositors than they do to raise them during hiking cycles. When Fed cuts arrive, APYs on savings accounts and money market accounts (MMAs) fall, shrinking your monthly interest payments.
A high-yield savings account paying 4.25% APY can slide to about 4.00% within weeks of a quarter-point Fed cut — and banks aren’t forced to trim rates by the same amount, so the drop can be even steeper. The impact gets worse with multiple cuts over time.
Let's see what these rate cuts might mean for a $10,000 balance:
Year 1
Year 3
Year 5
4.25%
$425
$1,330
$2,314
4.00%
$400
$1,249
$2,167
3.75%
$375
$1,168
$2,021
3.50%
$350
$1,087
$1,877
💡Smart move: Diversify beyond savings accounts before rate cuts begin. Consider building a CD ladder to lock in current rates, and consider whether larger cash amounts should be gradually invested in diversified portfolios for better long-term returns. A financial advisor that you can trust can help you make decisions that you’re happy with.
2. New CD shoppers
Anyone hesitating to lock in current CD rates often regrets waiting as banks slash yields on new certificates. The best rates on newly issued CDs quickly disappear once cutting cycles begin.
Longer-term CDs may see steeper cuts if banks anticipate further Fed reductions. That’s why the best time to lock in CDs during a downward rate environment is right now.
Digital banks typically offer the best CD rates, with institutions like Bread Financial standing out with competitive rates on various terms. Other digital banks, such as Valley Bank, reward larger deposits with premium yields. If you’re not sure about locking up your money, consider CIT Bank's no-penalty CD that lets you withdraw funds before maturity without the early withdrawal penalties that traditional CDs charge.
💡Smart move: Act quickly when rate cuts appear likely by locking in a CD or building a CD ladder with current high rates before they disappear. Focus on longer terms if you believe rates will stay low for extended periods, such as during rate reduction cycles.
3. Fixed-income retirees
When Fed rates drop, they could put you in a challenging situation if you depend on fixed-income investments for regular income. As rates fall, new bonds offer smaller interest payments than older ones. This means that bond funds — a common choice for fixed-income investors — might pay out less each month than they used to.
Money market funds, which many people use for relatively safe income, will likely see their yields and monthly payouts drop too. These funds invest in short-term loans to governments and companies. As their old loans come to an end, they’ll replace them with new ones that may have lower interest rates.
That’s why it’s important to spread your money across different types of investments that pay regular income. This includes dividend-paying stocks from large, stable companies such as utilities or consumer goods companies with long track records of paying dividends. Similar to the way CD ladders work, bond ladders can also help by giving you regular access to your money while locking in higher rates.
You can buy these assets using any one of the best investment platforms, including well-established names like Charles Schwab and Fidelity. Public is another investment platform that can automatically build and manage an entire bond portfolio for you.
💡 Smart move: Take a careful look at your investments with the help of a financial advisor and gradually adjust your investment mix to meet your long-term goals. The right financial advisor can help you find the best balance between your income and budget for your golden years.
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FAQs: Fed decisions and your money
Here's what you about protecting and growing your money as the Fed makes rate decisions. And take a look at our growing library of personal finance guides that can help you save money, earn money and grow your wealth.
Should I lock in my mortgage rate?
If you’ve found a mortgage rate that fits your budget, consider using a mortgage rate lock to guarantee that rate for a specific period while you close on your loan. Some lenders offer free rate locks for 30 days, with fees ranging from 0.25% to 1% of your loan amount for longer locks. Rather than trying to time the market, shop around for the lowest rate you're eligible for. See tips in our guide to finding the best rate on your next mortgage.
Can I use a home loan to pay down high-interest debt?
Yes. Typical interest rates on home equity loans are lower than those of the average credit card and personal loan, and could significantly lower the interest amount you'll pay on these separate debts. But there's a lot at stake if you aren't able to repay your home equity loan on time, including the potential loss of your home to foreclosure. Make sure any new loan you take on offers enough wiggle room in your budget for emergencies and unexpected expenses. Learn more about the risks and rewards in our guide to using your home's equity to pay off debt.
Are annuities a safe investment for retirees?
Annuities are a popular investment for many retirees, helping you to create reliable retirement income that can last as long as you do. While they come with higher fees than many other retirement savings options, they offer unique tax advantages that can appeal to retirees in higher tax brackets. But each type of annuity carries its own risks and costs, and you'll want to make sure you're buying from a reliable source. Learn more about annuity types, how to buy them and how to avoid scams in our comprehensive guide to annuities.
Should I move my money into stocks?
Consider shifting some savings into stocks if you’re OK with the risk and potential for loss and have more cash than you need over the short to medium term. Stocks may offer better growth potential when savings and CD rates fall, but keep in mind that past performance doesn’t guarantee future returns. Avoid moving all your money at once — gradually invest over time using a diversified portfolio that matches your risk tolerance. Keep enough cash in a high-yield savings account to cover up to six months of expenses, and avoid investing money you’ll need within the next few years.
Sources -
Consumer Price Index, U.S. Bureau of Labor Statistics. Accessed July 30, 2025.
30-Year Fixed Rate Mortgage Average, Federal Reserve Bank of St. Louis. Accessed July 30, 2025.
Commercial Bank Interest Rate on Credit Card Plans, Federal Reserve Bank of St. Louis. Accessed July 30, 2025.
About the writer
Yahia Barakah is a personal finance writer at AOL with over a decade of experience in finance and investing. As a certified educator in personal finance (CEPF), he combines his economics expertise with a passion for financial literacy to simplify complex retirement, banking and credit topics. He loves empowering people to make informed financial decisions that improve their everyday and long-term wellness. Yahia's expertise has been featured on FinanceBuzz, FX Empire and EarnForex. Based in Florida, he balances his love for finance with freediving, hiking and underwater photography.
Article edited by Kelly Suzan Waggoner
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