Fed officials expect another rate hike this year. Here's what it means for your wallet

Most Federal Reserve officials expect to raise interest rates again before the end of 2026, according to minutes from the central bank's September meeting released Wednesday.

At that meeting, the Fed raised its benchmark federal funds rate by a quarter of a percentage point, to a range of 3.75% to 4%, in a 12-0 vote, according to the Fed's official statement. It was the Fed's first rate increase in more than three years, according to Mortgage Professional America.

## What the minutes say

The minutes say "most participants" judged that "another increase in the target range for the federal funds rate would likely be appropriate by year end." No officials were reported as favoring a cut.

Officials said inflation "remained elevated" and that they "had not seen sufficient progress on lowering inflation in recent months." Fed staff estimated that the PCE price index, the Fed's preferred inflation measure, rose 3.8% over the 12 months through August, well above the Fed's 2% goal.

The minutes did not say when the next hike might come. The Fed's remaining meetings this year are Oct. 27-28 and Dec. 8-9, according to the Fed's calendar. Officials said they would approach each meeting "with an open mind" and let incoming data guide them.

## Why the Fed is raising rates

In its September statement, the Fed said it expects the rate increase to support a faster return to its 2% inflation goal. The statement said economic activity was expanding at a solid pace, job gains had kept up with labor force growth and the unemployment rate had changed little.

Some officials also flagged risks. Several said further tariff increases could push inflation higher, according to the minutes, and Mortgage Professional America reported that rising oil prices have driven recent inflation readings up.

## What it means for your credit card

Credit cards with variable rates usually see higher costs within one or two billing cycles after a Fed hike, according to a Citizens Bank explainer. According to the Fed's own consumer credit data, the average interest rate on credit card accounts that were charged interest was 22.15% in the second quarter of 2026.

Here is the math for one more quarter-point hike, if a card's rate rises by the full amount:

- Balance: $5,000
- Rate increase: 0.25 percentage point
- Extra interest: $5,000 x 0.0025 = about $12.50 a year

That is small on its own. But the September hike plus another would add about $25 a year on the same balance, and the cost grows with larger balances.

## Car loans, student loans and savings

According to the Fed's consumer credit data, the average rate on a new 60-month car loan at commercial banks was 7.14% in the second quarter. Fixed-rate loans you already have do not change when the Fed raises rates, according to Citizens Bank.

Federal student loans have fixed rates, so current borrowers' payments do not change when the Fed raises rates, according to a Citizens Bank explainer. Private student loans with variable rates can go up.

Savers can benefit. High-yield savings accounts and new CDs may pay more after a hike, though traditional banks often raise savings rates slowly, according to Citizens Bank.

## What it means for you

If you carry a credit card balance with a variable rate, another hike would raise what you pay in interest, and the math above shows how to estimate it. Fixed-rate debt, including federal student loans, stays the same. The Fed's next meeting ends Oct. 28.