Skip to content

Rates

TrustCedar

FFR Updated 8 min read By TrustCedar Rate Desk

What the Fed's Rate Does to Your Personal Loan

The federal funds rate is an overnight rate between banks. It reaches your credit card within weeks, a new fixed-rate loan slowly and partly, and a loan you already have not at all.

Target range (Oct 28, 2026)
3.75%–4.00%
Effective rate
3.88% (Nov 9, 2026)
Interest on reserve balances
3.90% (from Oct 29, 2026)
Quarter point, $10,000 loan
About $1.20 a month
Illustration: a columned building with an orange up arrow beside it

The bottom line

The Federal Open Market Committee sets a target range for the rate banks charge each other overnight. On October 28, 2026 it held that range at 3.75% to 4.00%, after a quarter-point increase in September that reversed the last of three cuts made in late 2025. The prime rate moved with it, and most credit cards and HELOCs follow prime within a billing cycle or two. A fixed-rate personal loan keeps its APR once you sign. On a new $10,000, 36-month loan, a quarter-point change is worth about $1.20 a month; a full point, about $4.80.

Three numbers behind one headline

When the news says "the Fed held rates," it means the federal funds rate: what banks charge each other to borrow reserves overnight. The Fed does not set a single number. It sets a range a quarter point wide and uses its own rates to keep trading inside it.

Target range

The policy decision: 3.75% to 4.00% since the September 2026 meeting, held on October 28. This is the range banks use when they set the prime rate.

Effective rate

What banks actually paid: a volume-weighted median of overnight trades, published each business day. It was 3.88% on November 9, 2026, inside the range.

Interest on reserve balances

What the Fed pays banks on money they keep at the Fed: 3.90% from October 29, 2026. A bank has little reason to lend overnight for much less, so this rate anchors the range.

For a borrower, the target range is the number that matters. Banks change their prime rate when the range moves, and prime is written into most variable-rate consumer credit.

The path through 2025 and 2026

After three cuts in late 2024, the range sat at 4.25% to 4.50% until September 2025. The committee then cut a quarter point at three meetings in a row. It held at 3.50% to 3.75% from December 2025 through July 2026, then raised the range by a quarter point on September 16, 2026 by a 12–0 vote. On October 28 it held, 10–2, with two members preferring another increase.

Changes in the federal funds target range since 2025, with the prime rate that followed
Effective dateMoveTarget rangePrime rate
September 18, 2025Cut 0.25 point4.00%–4.25%7.25%
October 30, 2025Cut 0.25 point3.75%–4.00%7.00%
December 11, 2025Cut 0.25 point3.50%–3.75%6.75%
September 17, 2026Raised 0.25 point3.75%–4.00%7.00%

The Fed lists each change by the day it took effect, the day after the announcement. Prime follows the same pattern: it equals the top of the target range plus three points. See the prime rate explained for the longer history.

Fast for cards, slow for fixed loans

A Fed decision reaches different kinds of credit at different speeds, depending on whether the rate is tied to an index or fixed when you sign.

  • Credit cards: most APRs are prime plus a margin, so they move by the same amount as prime once the card's rate resets, usually within one or two billing cycles.
  • HELOCs and many personal lines of credit: also usually prime plus a margin, and they follow the same way.
  • New fixed-rate personal loans: lenders reprice gradually. Their cost of money follows two- to five-year market rates, which often move before the Fed does, and most of a personal loan APR is the charge for risk and cost, which the Fed does not touch.
  • Existing fixed-rate personal loans: no change. The APR in your agreement stays until the loan is paid off.

That is why bank personal loan averages barely moved through the 2025 cuts. In the Federal Reserve's survey, the 24-month average was 11.14% in the third quarter of 2025 and 11.90% in the third quarter of 2026, while prime fell and then rose again. How personal loan rates are set explains the layers that do most of the work.

A worked example: $10,000 over 36 months

Suppose a lender offers you a 36-month personal loan of $10,000 at 12% APR. Here is what the payment and total interest look like if the offer were a quarter point or a full point higher or lower. These are worked examples from the standard amortization formula, not offers.

$10,000 over 36 months at different APRs (worked example)
APRMonthly paymentTotal interestChange vs. 12%
11.00%$327.39$1,786−$4.75 a month, −$171 total
11.75%$330.95$1,914−$1.19 a month, −$43 total
12.00%$332.14$1,957Baseline
12.25%$333.34$2,000+$1.20 a month, +$43 total
13.00%$336.94$2,130+$4.80 a month, +$173 total

A quarter point is about $43 over three years. A full point, the size of four Fed moves passed through in full, is about $170. Compare that with the gap between two credit tiers, which is often several points, or an origination fee of a few percent of the loan. On a personal loan, your credit file and the fee usually move the cost more than the Fed does.

What a cut does, and does not do, for a loan you have

A cut does not lower the rate on a fixed-rate personal loan you already have. It does not shorten the term or reduce the balance. What it can do is lower the rates lenders offer on new loans, after a lag and usually by less than the cut.

If that happens, or if your credit has improved since you borrowed, a new loan at a lower APR could replace the old one. Whether that pays depends on the fee, the time left on your loan and the term you choose. Our guide to refinancing a personal loan walks through the break-even math. If you carry a card balance, a cut does lower that APR within a cycle or two, but by only a quarter point at a time.

Reading the next decision as a borrower

  1. Note the date. The last scheduled meeting of 2026 is December 8–9, with new economic projections.
  2. Read the range and the vote. A change moves prime the next business day; dissents show which way the next move could go.
  3. Check the projections. In September 2026, the median projection for the end of 2026 was 4.1%, the midpoint of the range participants saw as appropriate. Projections are not promises and change at each meeting.
  4. Watch the two- to five-year Treasury yields. They show what lenders expect for fixed-rate pricing. See Treasury yields and loan rates.
  5. Bring it back to your offer. A quarter point is about $1.20 a month on $10,000. Our guide to FOMC meetings covers the statement in more detail.

Sources

We checked the facts on this page against these sources on November 11, 2026. Payment and interest figures are worked examples from the standard amortization formula, rounded to the dollar where marked; they are not offers.

Reader questions

Is the federal funds rate the rate I pay?

No. It is an overnight rate between banks. Your lender adds its charge for risk, costs and margin on top of its own cost of money, so a personal loan APR is usually several points above it.

How soon does a Fed increase reach my credit card?

Banks change prime the business day after the decision. A card tied to prime usually reflects the new rate within one or two billing cycles. See the prime rate explained.

Did my fixed-rate loan go up after the September 2026 increase?

No. A fixed APR stays as written in your agreement for the life of the loan, whatever the Fed does.

Should I wait for a cut before borrowing?

Only if waiting costs you little and the expected change is large enough to matter. The Fed raised its range in September 2026, and a quarter point is worth about $43 over three years on $10,000. Borrow now or wait has the trade-offs.

Put your loan on the board

Five quick answers and your contact details. TrustCedar passes the request to lenders and loan brokers; compare the APRs that come back against the rate board, and say no to any of them.

  1. 1 The amount, the purpose, your credit range, your timing and ZIP code.
  2. 2 Your name, phone, email and consent to be contacted.
  3. 3 A lender or loan broker may reply with an offer. No loan exists until you sign one.

Step 1 of 2

The loan on your desk

Any whole-dollar amount from $1,000 to $50,000.

Your credit, roughly
When you need the money

You pay TrustCedar nothing. The lenders and loan brokers who contact you set their own rates, fees and terms, and decide on credit themselves. How we make money.

More from the desk