What actually changed
On 16 September 2026 the Federal Open Market Committee raised the target range for the federal funds rate by a quarter point to 3.75%–4.00%, effective the next day. The Board also raised the primary credit rate to 4.0% and the interest paid on reserve balances to 3.90%.
The federal funds rate is an overnight rate between banks. No household borrows at it. It matters because other rates are priced from it — most directly the prime rate, which banks move in step with the top of the Fed's range.
Credit cards move, by a little
Most cards carry a variable rate set as the prime rate plus a margin, so the increase reaches the account once the issuer applies it, typically within a billing cycle or two. The arithmetic is simple: interest on a revolving balance is the balance times the rate, divided by twelve.
On a $6,000 balance a quarter point costs $1.25 a month — $110.00 at 22%, $111.25 at 22.25%. That is small; what is not small is the base rate itself. The same balance costs $110 a month before the change, which is the number worth attacking.
Worked example
$6,000 × 0.25% ÷ 12 = $1.25 a month
$40,000 HELOC → $8.33 a month
Adjustable loans move most
An adjustable-rate mortgage re-amortizes at its reset: the new rate is applied to every remaining month, so the whole payment changes, not just an interest sliver. On $300,000 with 300 months left, 7% to 7.25% takes the payment from $2,120.34 to $2,168.42, $48.08 more every month.
That is why a single quarter point costs a mortgage borrower dozens of dollars a month and a card holder a dollar or two. The size of the balance and the length of the remaining term do the damage, not the size of the move.
Savings move last, and only if the bank chooses
There is no rule forcing a bank to pass a rate rise to savers. Large banks with plenty of deposits often pass on very little; online banks competing for balances often pass on most of it. At full pass-through, a quarter point on $20,000 earns $4.17 more a month.
Netting the two sides gives the household answer. In the example above the debts cost $57.66 more a month while the savings earn $4.17 more — a net $53.50 a month, or $642 a year.
What does not change
A fixed-rate mortgage, auto loan or federal student loan keeps its rate for its whole life. A Fed decision changes what a new loan would cost, not what an existing fixed loan costs, which is the single most common misunderstanding after a rate announcement.
Fixed mortgage rates for new borrowers are priced off longer-term market yields rather than the overnight rate, so they can fall in the week the Fed raises, or rise in the week it cuts, if markets expected something different.
What to do with the number
Rank your variable balances by size times rate — that is the monthly cost of each — and pay down the top of the list first. A quarter point makes that ranking slightly worse; it rarely changes the order.
For savings, the practical test is not the Fed's range but what your own account pays. If it did not move after two consecutive increases, the rate is a decision your bank has made about you, and it is a decision you can respond to.
Common mistakes
Expecting a fixed-rate mortgage payment to change.It cannot; only new borrowing and variable-rate balances are affected.Assuming savings rates rise automatically.Pass-through is the bank's choice, and it varies enormously between banks.Reading the quarter point as a quarter point of your payment.On an amortizing loan the whole payment is recomputed, which is far more than 0.25% of it.Waiting for the next decision to act.The balance carried at 22% costs far more than any single quarter-point move.