By Jeanne Sahadi, CNN
(CNN) — The Federal Reserve’s decision Wednesday to leave its key overnight lending rate unchanged for the second time this year was expected.
But in addition to a disappointing February jobs report and other data, the Fed had to consider a new factor creating economic uncertainty: the attacks on Iran by the US and Israel, which have increased geopolitical stability and world oil prices – all of which point to potentially higher inflation and increased job losses if the conflict – and its domino effects – are protracted.
The Fed’s rate pause —and expectations that it may not lower rates again any time soon – is a mixed bag for consumers when it comes to the interest rates they will find for their savings and debts, all of which are tied directly or indirectly to the Fed’s moves.
Broadly speaking, “prepare for a moderately higher inflationary environment in the short to medium term,” said Kelly Kowalski, head of investment strategy at MassMutual.
To help do that, maximize the rates you get on your savings – both to stay ahead of inflation and to bolster your own safety net. And keep interest costs on your debt as low as possible.
Your savings
For some of the highest-yielding, lowest-risk ways to earn money on your savings, consider:
1. Online high-yield savings accounts: Some of the top variable rates on offer this week at Bankrate ranged from 4% to 4.10% on Wednesday. If you’re looking to get a solid return at some of the biggest banks in the online space, the rates ranged between 3.2% and 3.65% as of March 16, according to Ken Tumin, co-founder of DepositQuest.com.
2. Certificates of deposit: For money you can afford to lock up for fixed periods of time, you can get inflation-beating rates on CDs. The average rates on offer for CDs with terms between one and four years ranged between 3.80% and 4.15% on Schwab.com on Wednesday.
3. Money market funds: The average 7-day yield on the top 100 money market funds – which invest primarily in very short-term, low-risk debt – was 3.47% as of Tuesday, per Crane Data.
4. Treasuries: As of Wednesday morning, the best yields for Treasuries on offer with durations ranging from three months to five years were between 3.67% and 3.85% on Schwab.com. For US Treasuries with durations of 10 years or more, the average yields ranged from 4.22% to 4.92%.
And, bonus: Interest income from Treasuries is exempt from state and local income taxes.
Your debts
Whether you’re carrying or seeking so-called “good debt” like a mortgage or “bad debt” like a credit card, there are ways to reduce your interest burden.
5. Credit cards: The average credit card APR – at 19.58% per Bankrate as of Wednesday – may be below the all-time record high of 20.79% hit in August 2024. But both are punishingly high.
And credit card rates aren’t likely to budge much for now, according to Matt Schulz, chief consumer finance analyst at LendingTree, in an email to CNN. It’s more likely, Schulz said, that “card issuers will stand pat and see how events in Iran and elsewhere play out before making any major moves.”
If you’re carrying credit card debt and can’t pay it off quickly: 1) See if you qualify for a balance-transfer card that will give you up to 21 months to pay off your balance interest free; 2) call your issuer to see if they’d be willing to knock a few points off your current rate; or 3) see if you can consolidate your credit card debt into a lower-rate personal loan. The average rate on such loans was 12.26% as of March 12 for someone with a 700 FICO score borrowing $5,000 over three years, per Bankrate, which notes the best rates are as low as 6.2% for those with “stellar credit and stable income.”
As with any consumer debt product, the higher your credit score, the better your rate.
6. Mortgages: The average 30-year fixed rate mortgage hit 6.11% as of March 12, per Freddie Mac, marking the biggest weekly jump since April 2025, when President Donald Trump’s “Liberation Day” tariffs caused bond yields to spike. Before the attacks on Iran, the 30-year mortgage rate had slipped below 6%.
While rates often move up and down weekly, “one of the big risks during wartime is that the fluidity of the situation could lead to greater rate volatility, leaving potential buyers unsure what to expect and perhaps giving them yet another reason to stay on the sidelines,” Schulz said.
But those interested in closing a deal might expect borrowing costs to stay elevated as long as inflation does, said Stephen Kates, a financial analyst at Bankrate, via email. “(B)orrowers need to be proactive about improving their creditworthiness and comparing mortgage rates between lenders to lower their interest costs.”
7. Auto loans: In February, consumers buying a new car had borrowed close to $44,000 on average at 7% on a roughly 70-month loan, according to data from Edmunds.com.
Those buying used cars borrowed a little over $29,000 at an average rate of 10.9%.
Looking ahead, there’s a chance the cost of buying and owning a car may go up. “While it’s too early to gauge the full impact, a prolonged conflict involving Iran could also drive up supply chain and logistics costs, placing further pressure on vehicle prices,” said Jessica Caldwell, head of insights at Edmunds, in an emailed analysis.
To keep your costs down when shopping for a vehicle, experts say: 1) shop around for competitive deals; 2) borrow the least amount over the shortest term possible; and 3) make sure your credit score is in good shape, since vehicle loan rates you’re offered are more closely tied to your creditworthiness than to any moves the Fed may make.
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