Fed Holds Steady—Here’s How That Could Impact Your Budget This Summer

The Federal Reserve’s rate pause keeps borrowing expensive and savings attractive, at least for now.

The Fed announced Wednesday that it’s keeping its benchmark interest rate unchanged, holding steady at 4.25% to 4.50%. That’s the same level it’s been at since December 2024, and it means the cost of borrowing (and saving) likely won’t budge in the immediate future.

Federal Reserve Chair Jerome Powell said the Federal Open Market Committee wants to “learn more about the likely course of the economy before considering any adjustment to our policy stance,” during a press conference after the June FOMC meeting.

Powell highlighted that there is an “elevated uncertainty about the economic outlook, largely reflecting the trade policy concerns. It remains to be seen how these developments might affect future spending and investment.”

With the current macroeconomic picture and effects of tariffs, the Fed sees enough mixed signals to justify staying put for now.

“Uncertainty around the direction of inflation, a relatively stable labor market and fluctuating tariff policy are enough for the Federal Reserve to keep interest rates unchanged,” says Jerry Tempelman, former senior analyst at the New York Fed and vice president of fixed income research at Mutual of America Capital Management.

Recent economic indicators help explain that cautious stance. The May consumer price index rose just 0.1%, bringing year-over-year inflation to 2.4%—a sign that price pressures are easing. But with energy costs climbing amid Middle East tensions, the Fed is closely monitoring whether those gains stick and whether consumers and businesses can keep up.

Markets are taking note.

The 10-year Treasury yield dipped below 4.4% this week, signaling investor caution. According to the Dallas Fed’s Weekly Economic Index—a real-time measure of growth in gross domestic product based on consumer activity and labor trends—the economy grew at an annualized pace of 2.01% in mid-June, just below the 2.06% pace of 2025 Q1’s performance.

For consumers, that all adds up to one big question: What now? From your credit card bill to your savings account, these decisions shape your financial life. Let’s break down what the Fed’s hold means for your money and how to stay ahead this summer.

How This Affects Credit Card Borrowers

If you’re carrying a credit card balance, the Fed’s decision to keep rates steady offers zero relief. Most credit cards come with variable interest rates, and those have climbed alongside Fed rate hikes over the past two years, hitting levels that can feel downright brutal.

Currently, the average credit card APR is above 20%, according to the latest data from the Federal Reserve. A $5,000 balance, with minimum balance payments, could cost you around $1,000 a year in interest alone.

“Variable rates remain near historic highs, and most cardholders are paying over 20% compounding interest,” says Michael Brennan, president and CEO of Nationwide Mortgage Bankers. “If you’re only making the minimum payment, you’re stuck in reverse while trying to move forward. This is the time to attack high-interest debt aggressively, not coast. Debt is not just a financial burden, it’s a barrier to opportunity.”

If you’ve got credit card debt, now’s the moment to go on offense. Consider using a balance transfer card with 0% intro APR or explore a personal loan to consolidate debt at a lower fixed rate. Getting strategic now can save you hundreds—if not thousands—down the road.

What the Federal Reserve’s Rate Pause Means for Savers

While the stock market digests the Fed’s latest decision, savers are also trying to read the tea leaves. The Federal Reserve’s move to hold its benchmark rate steady means your high-yield savings account or certificate of deposit likely won’t see a bump, at least not right away.

The central bank’s federal funds rate sets the tone for what banks are willing to pay depositors. When that rate rises, banks often boost yields on savings products to stay competitive. But when the rate holds, as it has for most of 2025, many banks see little incentive to increase what they pay you.

That said, there are still solid rates out there—especially if you’re willing to shop around. Many online banks and credit unions are still offering high-yield savings accounts with annual percentage yields above 4.00%. Short-term certificates of deposit continue to deliver competitive returns for those looking to lock in a rate before any future cuts by the Federal Reserve.

For savers, the takeaway is simple: Don’t sleep on your options. A pause from the central bank is not a reason to sit idle. Compare rates, read the fine print and move your money if a better opportunity is available.

What Fed Rates Mean for Your HELOC

If you’re using a home equity line of credit, the Fed’s decision to hold rates steady means your borrowing costs aren’t budging. HELOCs are typically tied to the prime rate, which closely follows the Fed’s moves. So, no cut means those high monthly payments stick around for now.

“This is where discipline matters,” Brennan says. “If you’re using home equity to consolidate debt, improve energy efficiency or invest in long-term upgrades, that is strategic. But if you’re using it to finance lifestyle spending, you are borrowing tomorrow’s wealth for today’s comfort. Your home is not an ATM. It is a tool for growth, not consumption.”

Using a HELOC to upgrade your kitchen or weatherproof your home is typically a smart move. That money’s going back into your home, potentially boosting its value and lowering your insurance bill, not to mention, it’s usually tax-deductible.

But swiping your equity for vacations or day-to-day spending? That’s like turning your house into a piggy bank you can’t refill. Long term, it can be costly.

If you’ve already tapped your equity, now’s the time to throw a little extra at it while rates are steady. If you’re shopping for a new HELOC, ask about intro deals or fixed-rate options. Some lenders let you lock in part of your balance, which could save your budget if rates spike later.

What a Rate Hold Means for Your Investment Game

With the Federal Reserve holding interest rates steady at 4.25% to 4.50%, the message to investors is one of cautious patience.

“Markets prefer stability, so a Fed pause gives investors a moment to breathe,”  Brennan says. “But that is not a signal to take reckless risks. It is a chance to refocus on fundamentals.”

In this environment, long-term discipline matters more than fast plays. Brennan suggests the best-positioned investors are those keeping some cash in reserve, sticking to fundamentals, and preparing, not reacting.

Others see opportunity in rotation. Joseph Shaposhnik, portfolio manager of the Rainwater Equity ETF (RW), says a shift may already be underway. “Small- and midcap stocks are poised for a potential breakout,” he notes, after Big Tech names dominated the post-pandemic rebound.

Shaposhnik adds they’re likely to remain strong performers, especially amid global instability and slowing growth.

The bond market, meanwhile, presents both risk and reward.

John Lekas, CEO of Leader Capital, urges caution. “Bonds are a good investment if managed correctly,” he says, noting his firm has stayed on the short end of the yield curve to avoid unnecessary risk.

Lekas warns that premature rate cuts could actually backfire. “If the Fed were to cut rates in the current inflationary environment, it could lead to higher long-term rates rather than relief,” he says.

He also flags a broader macroeconomic risk: the dollar. “The current administration’s low dollar policy can fuel further inflation and reduce the appeal of U.S. assets to foreign investors,” Lekas adds.

For now, investors would be wise to hold steady, look beyond the day-to-day headlines and use this pause to rebalance. The market’s next moves may not come from the Fed, but from how prepared you are when they do.