The Federal Reserve’s wait-and-see approach to interest rate cuts in 2026 puts borrowers on edge wondering when they’ll get a break on car loans, mortgages and credit cards. Unfortunately, for now, consumers will need to create their own lucky breaks.
Many experts told us that we’d surely see some interest rate cuts in the first half of 2026. Nope. The Fed has held rates steady for each of the first three meetings of 2026 in January, March and April. Inflation is once again top of mind.
On Wednesday, the Federal Reserve announced that its policy committee decided to keep short-term interest rates the same. The target range for the federal funds rate remains at 3.5% to 3.75%.
The Fed took the same stay-put approach on March 18, stating then that “the implications of developments in the Middle East for the U.S. economy are uncertain.”
In its April announcement, the Fed stated: “Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.”
If the Fed isn’t offering borrowers relief, well, it means that borrowers must do all they can to make sure they qualify for the lowest rates possible — and shop around for deals on credit card rates, mortgages and car loans.
Yes, the Fed isn’t slashing interest rates. But many consumers can make a variety of moves to improve their chances of finding lower-than-average interest rates on many loans.
How to get a lower rate on a car loan
Car loans: The average annual percentage rate for new vehicle purchases was 6.9% in the first quarter, up from 6.7% in the fourth quarter last year but down from 7.1% in the first quarter of 2025, according to Edmunds, a car shopping website.
The average amount financed for new vehicles climbed to a record high of $43,899 in the first quarter of 2026.
Someone who is financing $43,000 at 7% for a new car loan would likely pay more than $9,000 in interest over the life of the car loan, according to Ivan Drury, director of insights at Edmunds.
If your credit is good to excellent, you can easily do far better than that by shopping around for a car loan and, possibly, shopping around for a car, SUV or truck that offers a great promotional interest rate.
Credit scores matter so much more when it’s tougher to find a low rate — which is why you absolutely must pay bills on time, make sure to keep balances low on credit cards and not take on too much debt.
Consider this data from Cox Automotive: The average loan rate for super prime borrowers — those with credit scores in the 760 to 850 range — who took out a new car loan in April was 5.3%. That compares with an average of 9.9% on a new car loan for borrowers with a prime rating with credit scores in the 660 to 719 range.
Take a $48,000 new car where the consumer is taking out a $42,000 car loan. A 9.9% rate would translate into a payment of $776 a month on a 72-month car loan. The lower 5.3% rate would mean a monthly payment of $682 — or a savings of $94 a month.
In the long run, a $48,000 car could end up costing $61,870 for a borrower who has a credit score that is just mediocre, said Mark Schirmer, Cox Automotive spokesperson. By contrast, the car would end up costing $55,123 over the 72-month car loan if you have strong credit and qualify for a lower interest rate.
Jeremy Robb, chief economist at Cox Automotive, said the Fed is holding back cutting rates now as policymakers weigh elevated inflation risks against a labor market that continues to send mixed signals.
He noted in a report that nearly two months of sustained higher energy prices reinforce a “wait‑and‑see approach” and complicate the near‑term path outlook for possible reductions in interest rates.
Car loan rates are likely to remain higher for a longer period of time, he said.
“The inflation story could improve in the second half of the year,” Robb said, “but in the current environment, there is little reason to expect any movement by the Fed.”
Yet anyone who spots an ad or two on TV or elsewhere knows that automakers are touting some pretty low rates on specific makes and models. Head-turning financing deals aren’t offered across the board, but a few are out there.
“If you’re brand agnostic and have relatively good credit, low interest rate offers could easily save thousands of dollars over the life of the loan,” Drury at Edmunds said.
A dealer could offer captive financing, such as a 0% rate offered by the financing arm of an automaker, if you qualify.
In April, roughly 6% of all dealer finance deals had rates of 1.99% or lower, according to Edmunds. Some models, according to Drury’s research, included the Buick Envision, Ford Mustang Mach-E, Mazda CX-70, Chevrolet Bolt, Hyundai Sante Fe, and Toyota Prius Plug-In Hybrid.
Drury recommends asking about other low rate deals even if the one advertised doesn’t work for you.
Other ways to qualify for low rates: Do your best to keep a higher credit score; shop at local credit unions, banks and elsewhere for a lower rate car loan before walking into the dealership. Check out your credit report to spot any errors and fix them before applying for any loan. See AnnualCreditReport.com for free reports.
Consumers often don’t realize that the interest rate they pay for an auto loan isn’t predetermined based entirely on their credit score or credit history. Experts say consumers may run into hidden finance markups that benefit the dealership, not the consumer. It pays to shop around for a loan.
A new tax break can save money on some car loans, too
The new deduction for new car loan interest under the One Big Beautiful Bill applies on 2025, 2026, 2027 and 2028 federal income tax returns. It might save many people a few hundred dollars or more on their tax bill.
The deduction — which can be claimed even if you take the standard deduction — does not apply to leases or used cars. The vehicle must have final assembly in the United States. Check the VIN Decoder tool at the National Highway Traffic Safety Administration website to confirm the location of final assembly.
On 2025 returns, more than 1 million taxpayers claimed the deduction for new car loan interest on their federal returns as of April 14, the day before Tax Day, for vehicles bought in 2025, according to the U.S. Treasury Department’s data.
The average deduction was more than $1,800. The amount that’s claimed on tax returns for car loan interest will vary each year, as more interest is typically paid in the initial years of a car loan. How much you’d save in tax dollars would vary based on your tax bracket. At a 22% tax rate, the tax savings would be $396 on a $1,800 deduction.
The deduction phases out for higher income households. In simplest terms, many tax websites note that the deduction for auto loan interest is no longer available at a modified adjusted gross income of $150,000 for single filers and $250,000 for married couples filing a joint return.
How to find a better deal on credit cards
Credit cards: The average credit card rate offered to consumers now is 19.57% — down a bit from 20.09% a year ago, according to Bankrate.com. Bankrate.com uses the midpoint of the range of credit card rates offered by more than 100 popular cards from the 50 largest issuers.
Looking for a better rate? Check your mailbox and shop online. If your credit score is good, say a FICO score of 670 or better, you might qualify for offers of 0% on balance transfers and new purchases for a limited time, according to Ted Rossman, principal analyst for Bankrate.com.
“The best credit card deals are for new customers,” Rossman said. You can get 0% on balance transfers and new purchases for up to 21 months on some cards like the Wells Fargo Reflect and U.S. Bank Shield Visa.
If you have credit card debt, and roughly half of cardholders do, Rossman recommends that you forget about rewards and focus on finding the best interest-busting credit card.
If you’re able to get a 0% offer on a balance transfer, he said, divide what you owe by the number of months you’ll be covered by 0%. And then aim to pay off all that you owe over the next 21 months if that’s the length of that offer.
Able to transfer $5,000 in credit card debt to a card offering 0% for 21 months? In that example, you could aim to pay $250 a month to annihilate all that credit card debt in less than two years while you’ve got 0% on the table.
“Don’t add new purchases, since it’s hard to hit a moving target,” Rossman said.
Consumers who have a low credit score — or more than $5,000 or $6,000 in credit card debt — should consider working with a reputable nonprofit credit counselor, such as Money Management International or GreenPath Financial Wellness, Rossman said.
“They have debt management plans along the lines of a 6% to 7% rate over four to five years, and they work with just about everyone,” Rossman said.
Overall, consumers automatically would have seen slightly lower rates on their credit cards in early 2026 if the Fed had cut short-term interest rates as many expected by now.
Some had forecast three quarter-point rate cuts in the first half of 2026, but the outlook changed quickly.
Mark Zandi, chief economist for Moody’s Analytics, said the war in Iran dashed those expectations. The Fed’s stance is to put rate cuts on hold amid extraordinary uncertainty, he said, much like what took place when the Trump administration imposed tariffs in 2025.
It’s unclear, Zandi said, whether the Fed will resume rate cuts amid the fallout from the Iran war.
Slower economic growth and higher unemployment could be expected ahead, Zandi said, favoring rate cuts. But the uptick in inflation and fear that inflation could go higher could make an argument for rate hikes in the future.
How can you get a rate below 6% on a home loan?
Mortgages: The average 30-year fixed-rate mortgage rate hit 6.23% as of April 23, according to Freddie Mac’s weekly survey. That’s down from 6.3% the previous week, and down from 6.81% a year ago.
The mortgage rate you’d qualify to receive will vary based on a long list of factors, including your credit score, the size of your down payment and yes, how much you’re willing to shop around.
“Mortgage rates really come down to how risky you look on paper,” said Matt Schulz, chief credit analyst for the Lending Tree.
“The best thing you can do is boost your credit score, lower your debt, and put down as much as you comfortably can,” Schulz said.
A strategy for boosting your credit score: “Paying down credit card balances can help your score surprisingly fast, as can correcting mistakes on your credit report if you find them,” Schulz said.
A buyer who can comfortably put down 20% or more of the purchase price, typically can qualify for a lower rate, according to experts. The lender is taking on less risk when you have more money invested in the property.
Rossman advises that maintaining a strong credit score and shopping around for the best rate can yield huge savings overall.
“A big mistake we see is just going with the first quote you get, which is often based on the recommendation of a real estate agent, family member or friend,” Rossman said.
Rossman noted that earlier in April the best 30-year fixed mortgage rate on Bankrate was 5.64% — besting a national average of 6.36%. Ultimately, he said, that works out to nearly $67,000 in interest savings over 30 years on a $400,000 mortgage.
From a credit scoring standpoint, he said, multiple mortgage inquiries within 14 days to 45 days, depending on the credit scoring model, are grouped as one inquiry and will not hurt your credit score.
And while it’s often smart to get preapproval for a mortgage, Rossman notes that preapprovals are typically nonbinding and should not stop you from shopping for a better rate once you find a home you want to buy.
Significant differences among lenders can exist when it comes to the terms offered. Sites like LendingTree and Bankrate.com provide ways to compare offers from multiple lenders at once. Consumers also can reach out to local credit unions and lenders.
As you shop for a low rate, make sure you understand all the fees involved. A lender might quote a lower rate than others. But you need to know if that rate involves paying points, which are essentially an up-front fee to capture a lower rate. One point is typically 1% of the total amount borrowed or $1,500 on a $150,000 mortgage. In general, one point typically reduces your mortgage rate by a quarter of a point.
Rossman said buying points to lock in a lower rate often works best if you plan to stay in the house several years and do not plan to refinance your mortgage in a few years.
Another key tip: Pay attention to whether the low rate you see advertised has any up-front fees or points. Take time to research any complaints about a mortgage lender, as well as digging into any details involving advertised rates.
Story by Susan Tompor of the Detroit Free Press / USA Today Network via Reuters.
Contact personal finance columnist Susan Tompor: [email protected]. Follow her on X @tompor.
