Markets are strongly expecting a 0.25 percentage-point rate increase. Federal funds futures are pricing in about a 90% chance of a quarter-point hike, according to the CME FedWatch Tool. The Federal Reserve is widely expected to raise interest rates on Wednesday, which would be its first rate hike in more than three years.
Because they are mainly designed for easy access to money and everyday payments, rather than earning interest, according to Yahoo Finance, checking accounts generally offer low returns. Because higher interest rates can create more volatility in stock markets, the Fed’s decision also matters to investors. Checking account rates have barely moved in 2026. The national average interest rate on checking accounts is around 0.07%. Regular savings accounts currently offer an average rate of about 0.38%. Many are currently paying rates in the 3% range, while some accounts can offer yields close to 4%. Housing analysts at the Mortgage Bankers Association and Fannie Mae expect mortgage rates to remain above 6.5% through 2027.
The Fed’s interest-rate decision will affect more than just Wall Street and stock prices. The federal funds rate also influences savings rates, credit-card interest, personal loans and, to a lesser extent, mortgage rates. For savers, a higher Fed rate can eventually mean banks offer slightly better interest rates on deposits. However, the increase is usually gradual, and basic bank accounts may still offer very low returns. A Fed rate hike could push checking-account earnings slightly higher, but the increase is likely to be small. These accounts are generally used for money that people may need in the near term. High-yield savings accounts offer much better returns. That means people planning to buy a home may continue to face high borrowing costs even if the Fed’s rate move is relatively small.
The national average rate for money market accounts is only about 0.63%, so standard accounts may still provide limited returns. High-yield money market accounts can pay much more, with rates mostly in the mid-3% range and some just below 4%. A consumer carrying the average second-quarter 2026 credit-card balance of $6,610 at a 22% APR could see the minimum monthly payment rise by about $1.38 if the higher rate is passed through, Raneri said. The average personal-loan interest rate is currently around 11.86%. Advertised personal-loan rates are generally in the 7%-8% range, although the actual rate a borrower receives can vary based on factors such as creditworthiness and the lender.
Banks have already started increasing some CD rates, according to Yahoo Finance. Michele Raneri, vice president and head of U.S. research at TransUnion, expects only a “minimally higher” borrowing cost for consumers as variable-rate products reflect the Fed’s move, according to Yahoo Finance. the cost can become significant over time for people who carry large balances or make only minimum payments, Raneri said While that monthly increase may appear small. Raneri also said that reducing revolving credit-card debt can help consumers limit the impact of higher interest rates, according to Yahoo Finance.
Certificates of deposit, or CDs, could also benefit from higher rates. Personal-loan rates have also moved higher.
What the Fed hike means for investors
For investors, the key is therefore to watch interest rates, the wider economy and corporate earnings instead of reacting only to the Fed’s rate decision. Because deposit rates may rise, but it can be bad for people carrying variable-rate debt because borrowing costs can increase, the main takeaway for households is simple: a Fed rate hike can eventually be good for people who are saving money. Savers should therefore compare high-yield savings accounts, money market accounts and CDs rather than assuming their existing bank account will automatically give them the best return. Because even a small increase in rates can become costly when carried for a long time, borrowers, meanwhile, should focus on paying down expensive revolving debt, particularly credit-card balances,.
For someone with around $10,000 or more sitting on the sidelines, these accounts can provide a place to keep the money while maintaining access to it. Credit-card interest rates have climbed sharply, from around 16% in 2021 to more than 22% today. Historical data shows that the S&P 500 has suffered an average maximum loss of more than 10% within 12 months after the start of a higher-interest-rate cycle, Gordon said. He expects the S&P 500 to rise above 8,000 within one year.
Kevin Gordon, head of macro research and strategy at Schwab, said there is an old Wall Street saying, “Don’t fight the Fed,” because Fed rate-hiking cycles can bring significant market turbulence, according to Yahoo Finance. However, Gordon said the current economic backdrop remains relatively favorable for the Fed to raise rates and that the economy could withstand even more than one hike. Shugar said investors could still find opportunities in several AI-related consumer sectors, although he warned that markets could face more “speed bumps” over the next few weeks, according to Yahoo Finance.
This means savers could benefit more from a higher-rate environment if they shop around for competitive savings rates instead of leaving large amounts of cash in a low-paying account. Money market accounts are another option for people who want their money accessible while earning interest. Credit-card users are likely to feel the impact quickly. People who pay their entire credit-card balance every month generally avoid paying interest, so the rate increase has little direct impact on them. Consumers who carry a balance from month to month, however, can see their borrowing costs rise as variable credit-card rates adjust. Goldman Sachs partner John Shugar is also relatively optimistic about the stock market over the longer term. Stocks are not driven only by Fed policy. AI investment trends and higher oil prices, which can fuel inflation, are also important factors for markets right now. For conservative investors, focusing on high-quality companies that have performed through different economic conditions can help reduce some of the risks from a volatile rate environment. In short, the same Fed rate hike can help savers and hurt borrowers: your cash may earn more interest, but your credit-card and other variable-rate debt could cost more.
Mortgage rates are heavily influenced by the bond market and 10-year Treasury yields, and markets often price in expected Fed moves before the Fed actually changes rates. Mortgage rates have recently neared or crossed 7%, depending on the source tracking the rates, as 10-year Treasury yields have also moved higher. Mortgage rates work somewhat differently from credit-card and personal-loan rates. A Fed rate hike does not automatically cause mortgage rates to rise by the same amount. Mortgage rates had reached three-year lows around the end of February and early March, but they later moved higher after the war in the Middle East began.
