When the Federal Reserve changes its target rate, what happens to your interest rate depends on the product. Variable-rate savings and money market accounts, credit cards tied to the prime rate, HELOCs and adjustable-rate mortgages (ARMs) can reprice; fixed-rate certificates of deposit (CDs) and fixed-rate loans generally keep the rate in their disclosures until they end or renew. As of November 4, 2026, the Fed's target range for the federal funds rate is 3.75% to 4.00%, and the Federal Open Market Committee left it unchanged at its October 28 meeting.
Key takeaways
- Banks set deposit rates themselves. In October 2026 the national average savings rate was 0.38% and the 12-month CD rate 1.76%, far below the Fed's 3.75% to 4.00% target range.
- If a 0.25-point move passes through in full, it changes interest by $25 a year on $10,000, so a small move can matter less than the gap between your rate and what other banks pay. Banks can also move savings rates by more or less than the Fed, or without any Fed move.
- Credit card and HELOC rates tied to a public index such as the prime rate can change without advance notice; other significant card changes need 45 days' written notice.
- A card issuer generally cannot raise the rate on an existing balance except in listed cases, one of which is a variable rate tied to an index.
- The index, margin, caps and reset schedule in your own agreement decide how much of a Fed move reaches you and when.
What happens when rates change
The federal funds rate is the rate at which banks lend reserve balances to one another overnight. The Federal Open Market Committee sets a target range for it, and the Fed's open market operations page lists the current range as 3.75% to 4.00%, in place since a quarter-point increase on September 17, 2026. The October 28, 2026 FOMC statement kept it there on a 10-2 vote; the two dissenters preferred a quarter-point increase.
The Fed's H.15 selected interest rates release showed an effective federal funds rate of 3.88% and a bank prime loan rate of 7.00% on November 2, 2026. The prime rate is the index many card and HELOC agreements use. Neither number is your rate. Your rate comes from the contract you signed, and the Fed does not set it.
Savings, money market and CDs
Deposit rates move because banks choose to move them. The FDIC's national rates page showed averages of 0.38% for savings, 0.63% for money market accounts and 1.76% for 12-month CDs as of October 19, 2026. All three sit well below the Fed's target range, so a Fed move does not translate point for point into what an average account pays. Accounts at institutions that compete on rates can pay much more than the averages, and the gap between your APY and the best available APY can be larger than a single Fed change, as the example below shows.
Variable accounts reprice, often without notice
Savings and money market accounts are typically variable-rate: the bank can change the rate on an existing balance. Under the deposit disclosure rule, Regulation DD, 12 CFR 1030.5, a bank must give at least 30 days' notice of a change that may reduce the APY or adversely affect the consumer, but it does not need to give advance notice of interest rate and APY changes on variable-rate accounts. A cut can therefore show up on the next statement. Check the rate on the statement or online, not only the rate you were quoted when you opened the account.
CDs lock the rate until maturity
A CD's rate and term are stated in the account disclosures, so a Fed move after you open one does not usually change it; check the terms of your own CD. The change arrives at renewal. For an automatically renewing CD with a term longer than one month, Regulation DD requires the bank to provide renewal disclosures at least 30 calendar days before maturity, or at least 20 calendar days before the end of the grace period if the grace period is at least five days. That notice is the moment to compare the renewal rate with other offers.
Illustrative example: a quarter-point cut on $10,000
The figures below are hypothetical and use simple annual interest to keep the arithmetic visible.
| Account type | Rate before | After a 0.25-point cut passed through in full | Interest per year on $10,000 |
|---|---|---|---|
| Variable savings | 4.00% | 3.75% | $400 falls to $375 ($25 less) |
| 12-month CD opened before the cut | 4.00% | 4.00% until maturity | $400 (no change until renewal) |
| Savings at the FDIC national average | 0.38% | 0.13% if cut by the same 0.25 points | $38 falls to $13 |
The table shows two things. A full pass-through of a quarter-point cut costs $25 a year on $10,000, which is small. The bigger number is the $362 a year that separates 4.00% from the 0.38% national average on the same $10,000, so rate shopping matters more than the Fed's last move. A hike works the same way in reverse, and whether any bank passes it through is the bank's decision.
What happens to credit card rates
Most card APRs are variable: the agreement sets the APR as an index, commonly the prime rate, plus a margin. When prime moves, the APR typically moves by the same number of points, on the date the agreement specifies. Under Regulation Z, 12 CFR 1026.9, an increase in a variable APR made under an agreement tied to a publicly available index outside the issuer's control does not require advance notice. Other significant changes to an open-end account's terms need written notice at least 45 days before they take effect, and card accounts get a right to reject certain of those changes. According to the official commentary, that right does not cover a change in the APR, an increase in the minimum payment, or changes made after a payment is more than 60 days late.
The same rule limits what an issuer can do to money you already owe. 12 CFR 1026.55 generally bars raising an APR, including on an existing balance, with listed exceptions, including: a rate that rises because a public index rises (changing the margin does not qualify), the end of a disclosed promotional period of at least six months, a payment more than 60 days late, a workout arrangement, and, after the first year, an increase applied only to transactions made more than 14 days after the required notice. A late-payment increase also requires notice and must be reversed, for the balances it applied to, after six consecutive on-time minimum payments.
Illustrative example: prime moves a quarter point
Assume a card APR of prime plus 15 points. With prime at 7.00%, that is 22.00%. On a $5,000 balance carried all year, monthly interest is about $91.67 ($5,000 × 22.00% ÷ 12). If prime rises 0.25 points, the APR becomes 22.25% and monthly interest about $92.71, an increase of roughly $1.04 a month, or $12.50 a year. A quarter-point move is minor on a card; the 22% level itself is the cost. A card issuer's actual margin, balance method and index are in the cardholder agreement.
HELOCs and adjustable mortgages
Home equity lines of credit (HELOCs) are also indexed. Under 12 CFR 1026.40, a lender must identify the index and explain how the APR is determined, including the margin, and must disclose how often the APR can change and any periodic and maximum limits. A creditor may change the APR only when the change is tied to a publicly available index outside its control; a published prime rate such as the one in the Wall Street Journal qualifies, but the lender's own prime rate or cost of funds does not. Other changes to a HELOC's terms generally need at least 15 days' notice, but under the official commentary to 12 CFR 1026.9 no notice is needed for rate increases under a properly disclosed variable-rate plan.
ARMs reprice on a schedule. The CFPB's ARM explainer describes the rate as the index plus a margin, with caps on how much it can change at one adjustment or over the life of the loan. After the initial fixed period, the rate changes at regular intervals, so the date of your first adjustment matters more than the date of the next Fed meeting. For an ARM secured by your principal dwelling with a term longer than one year, 12 CFR 1026.20 requires a notice 210 to 240 days before the first payment at the adjusted rate is due after the first adjustment, and generally 60 to 120 days before the first new payment after later adjustments that change the payment.
Illustrative example for a $250,000 balance with 25 years left: at 6.00% the principal-and-interest payment is about $1,611 a month; if a reset raised the rate to 7.00%, it would be about $1,767, an increase of about $156 a month. On a $50,000 HELOC balance with interest-only payments, each full percentage point adds about $41.67 a month, and a quarter-point adds $10.42. Whether caps would stop a given jump depends on the caps in your loan.
Which products follow a Fed move
| Product | Follows a Fed move? | What controls the timing |
|---|---|---|
| Savings, money market | Not automatically; the bank decides | Bank's rate decisions; variable-rate changes need no advance notice under Regulation DD |
| CD | Not during the term; yes at renewal | Maturity date and renewal disclosure |
| Credit card | Yes, if the APR is tied to an index such as prime | Index, margin and the agreement's timing |
| HELOC | Yes, if variable | Index, margin, adjustment frequency and caps |
| ARM | At each adjustment date, once the fixed period ends | Index, margin, caps and adjustment schedule; advance notice under Regulation Z |
| Fixed-rate loan | No | The stated rate stays until you refinance |
Note that the Fed target is a short-term rate. Which index a lender uses, and how long it lags, is set in each contract, so two borrowers can see different results from the same Fed decision.
Frequently asked questions
Will a Fed rate cut lower my CD rate?
Not for a fixed-rate CD during its term, because the rate is stated in the CD's account disclosures; a variable-rate CD follows its own disclosed terms. It matters at renewal: for an automatically renewing CD longer than one month, the bank must provide renewal disclosures at least 30 calendar days before maturity, or at least 20 days before a grace period of five days or more ends. Compare the renewal rate with other offers before the grace period closes.
Can my bank cut my savings rate without telling me?
For a variable-rate account, yes. Regulation DD exempts interest rate and APY changes on variable-rate accounts from the 30-day advance-notice requirement. Other changes that may reduce the APY or adversely affect you do require 30 days' notice.
Can my card issuer raise the rate on a balance I already have?
Generally not, but there are exceptions. Regulation Z lets the rate rise on existing balances when it is a variable rate tied to a public index that went up, when a disclosed promotional period of at least six months ends, when the minimum payment is more than 60 days late and the required notice is given, or when a workout or hardship arrangement ends. A late-payment increase must be reversed, for the balances it applied to, after six consecutive on-time minimum payments.
Where are the index and margin listed for a loan or card?
In the account agreement and disclosures. For a HELOC, the lender must identify the index and explain how the APR is determined, including the margin, although it need not state the margin's value in that disclosure. The account agreement's rate-change section states the margin and the adjustment schedule, and your periodic statement shows the APR now in effect.
Does a Fed hike change a fixed-rate loan I already have?
No. A fixed-rate loan keeps the rate in its agreement unless you refinance or the agreement itself provides for a change. The CFPB notes that an ARM, by contrast, begins with a rate that holds for a period and then adjusts at regular intervals.
A 15-minute check of your accounts
- List each account and loan, and mark it fixed or variable using the agreement or latest statement.
- For variable credit and loans, write down the index, margin, adjustment dates and caps, then compare your current rate with index plus margin.
- For each CD, note the maturity date and the renewal notice deadline.
- For savings and money market accounts, compare your current APY with the FDIC national average and with rates other insured banks and credit unions publish.
- For any ARM, find the next adjustment date and the cap on a single adjustment, then estimate the payment at the capped rate.
This is general educational information, not personal financial advice. Terms vary by lender, so rely on your own agreement and ask the lender or a licensed adviser about your situation.
Sources
- Federal Reserve, FOMC statement, October 28, 2026
- Federal Reserve, Open Market Operations
- Federal Reserve, H.15 Selected Interest Rates
- FDIC, National Rates and Rate Caps
- CFPB, Regulation DD, 12 CFR 1030.5
- CFPB, Regulation Z, 12 CFR 1026.9
- CFPB, Regulation Z, 12 CFR 1026.55
- CFPB, Regulation Z, 12 CFR 1026.40
- CFPB, Regulation Z, 12 CFR 1026.20
- CFPB, Index and margin on an adjustable-rate mortgage
