4 smart money moves to take advantage of the last rate cut of 2025

On Dec. 10, the Federal Reserve lowered the federal funds rate for the third and final time in 2025, ending the year at a range of 3.5% to 3.75%.

Following three reductions in late 2024, rates remained frozen throughout much of 2025. But, starting in September, the Federal Open Market Committee pulled off three consecutive 25-basis-point cuts.

• Read more: 4 money moves to make before the Fed lowers rates again

While the Fed doesn't directly control interest rates, it determines what banks charge each other when borrowing or lending excess reserves overnight. That, in turn, influences interest rates on everything from car loans to credit cards.

Lowering the fed fund rate impacts the cost of borrowing and manifests in interest rates on credit cards, auto loans, mortgages and more. It also influences the yields savers receive on CDs, high-yield savings accounts and money market accounts.

"It affects everything a little differently and in different magnitudes," Amy Hubble, principal investment advisor with Radix Financial, told CNBC Select.

Here are some financial steps to help you take advantage of the latest rate cut — and any more coming in 2026.

A rate cut news may sound like a boon for consumers with big credit card bills, but a quarter-point reduction might only lower your APR by about half a percentage point.

Instead of waiting for more cuts, consider opening a 0% intro APR balance transfer card to give yourself more time to pay off your balance interest-free. 

At 21 months, the Wells Fargo Reflect® Card has one of the longest introductory 0% APR periods for purchases and qualifying balance transfers we've found. (After that, a variable 17.49%, 23.99%, or 28.24%, APR applies).

Balance transfers made within 120 days qualify for the intro rate, but keep in mind that the balance transfer fee on the Reflect Card is 5% of each transfer (with a minimum of $5). Additionally, you should prioritize paying off the full balance quickly or you could be stuck with an even higher interest rate once the intro APR period ends.

The Fed's move will also lower interest rates on personal loans, so now might be the time for a debt consolidation loan, which would replace your existing card balance with a lower, fixed rate.

Nearly 6 million Americans are at least three months behind on their federal student loan payments, according to a TransUnion report, with approximately 2 million defaulting in September 2025 alone. 

A drop in the federal funds rate means interest rates on student loans will also decline. If you have newer loans and were hit with high rates, the next year or two may be a good time to refinance.

If the Fed makes more cuts in the new year, it could go a long way toward thawing the frozen housing market.

Mortgage rates are more closely linked to 10-year Treasury yields, but they're not immune to the central bank's action.

Read more: The best mortgages for first-time homebuyers

"These rates may not necessarily move exactly in tandem with a reduction in the federal funds rate," said Hubble. "But it's still fair to assume that a lower fund rate will also mean a lower mortgage rate."

As of Dec. 11, the average rate for a 30-year, fixed-rate mortgage was 6.22%, according to the Federal Reserve of St. Louis. While nowhere near the record-low 2.65% borrowers enjoyed during the pandemic, it's a notable decline from January 2025, when the average mortgage rate topped 7%. 

The Federal funds rate is directly linked to the yield savers get on money-market accounts, CDs and savings accounts. It costs banks more to borrow when the Fed raises its rate, so they make deposits more appealing to consumers.

When the Fed cuts rates, there's less need for reserves and returns on savings products decrease almost immediately.

• Read more: The best high-yield savings accounts

Even if a CD or HYSA drops below 4%, though, that's still an exponentially stronger return than what you'll get with traditional savings accounts. They're hovering around 0.40%, according to FDIC data. In particular, a CD would let you lock in today's interest rate for months or even years, regardless of future rate cuts.

At CNBC Select, we work with experts who possess specialized knowledge and authority based on years of training and real-world experience. For this story, we interviewed Amy Hubble, a principal investment advisor with Seattle-based Radix Financial. A certified financial planner, Hubble received a Ph.D. in consumer economics from the University of Georgia.

At CNBC Select, our mission is to deliver high-quality service journalism and comprehensive consumer advice to our readers, enabling them to make informed financial decisions. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content independently of our commercial team and any outside third parties, and we pride ourselves on maintaining high journalistic standards and ethics.

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