The Fed is expected to cut borrowing costs again on Wednesday.
Following the rate cut in September, another 25 basis points cut would lower the federal funds rate to a range of 3.75%-4.00%.
The federal funds rate is set by the Federal Open Market Committee and is the rate at which banks lend each other overnight. While that's not the rate consumers pay, the Fed's move does have a trickle-down effect on many types of consumer loans.
The FOMC also set expectations for another rate cut in December, but the path thereafter is unclear. U.S. President Donald Trump has said that a replacement for current Federal Reserve Chairman Jerome Powell may be selected before the end of the year. He has repeatedly expressed opinions on Fed policy and believes that interest rates should be significantly lowered.
Interest rates are not going to continue to fall, and even if they do, not all consumer goods will be affected equally.
'The Fed won't cut every interest rate'
When the Federal Reserve raised interest rates in 2022 and 2023, rates on most consumer loans quickly followed suit. Although this will be the second rate cut in a row, many For now, these consumer rates are likely to remain high.
“The Fed is not cutting all the interest rates in the world,” said Mike Pugliese, senior economist at Wells Fargo Economics.
Depending on the term, he said, some borrowing rates are more sensitive to changes by the Fed than others: “On one hand, you have shorter floating rates, and on the other hand, you have a 30-year fixed-rate mortgage.”
These short-term rates are more closely tied to the prime rate, the interest rate banks offer their most creditworthy customers – typically 3 percentage points above the federal funds rate. Long-term interest rates are also affected by inflation and other economic factors.
Credit cards won’t “go from terrible to amazing overnight”
Olga Lorenko | Moment | Getty Images
Nearly half of U.S. households have credit card debt and pay an average of more than 20% interest on their revolving balances, making credit cards one of the most expensive ways to borrow money, according to Bankrate.
Since most credit cards have short-term floating rates, there is a direct link to the Federal Reserve's benchmark.
When the Fed lowers interest rates, the prime rate also drops, and the interest rate on your credit card debt may adjust within a billing cycle or two. But even then, credit card APRs will only fall back to extremely high levels. Generally, card issuers keep interest rates at a certain level to mitigate risk for riskier borrowers.
“Even if the Fed ramps up rate cuts in the coming months, credit card rates aren't going to go from bad to amazing overnight,” said Matt Schulz, chief credit analyst at LendingTree.
Read more CNBC personal finance coverage
For example, if you have $7,000 of credit card debt on your card with an interest rate of 24.19 percent and make monthly balance payments of $250, lowering your APR by a quarter of a percentage point will save you about $61 over the life of the loan, according to Schultz.
Cars and home buyers benefit slightly
Although car loan rates are fixed for the life of the loan, experts say potential car buyers could benefit if borrowing costs fall in the future.
The current average interest rate on a five-year new car loan is about 7%. Jessica Caldwell, director of insights at Edmunds, previously told CNBC that going forward, “a modest rate cut by the Fed won't significantly cut consumers' monthly payments, but it does boost overall buyer sentiment.”
Longer-term loans, such as mortgages, are less affected by the Fed. 15-year and 30-year mortgage rates are more closely tied to Treasury yields and the economy.
Still, experts say expectations of further rate cuts in the future could put some downward pressure on mortgage rates, which could “prompt more Americans to consider getting back into the housing market after waiting on the sidelines for so long,” LendingTree's Schultz said.
Other home loans are more closely tied to the Fed's actions. Adjustable rate mortgages (ARMs) and home equity lines of credit (HELOCs) are tied to the prime interest rate. Most ARMs adjust annually, but HELOCs adjust immediately.
Subscribe to CNBC on YouTube.