Federal Reserve's December rate cut to boost local holiday spending in 2025

As families budget for gifts, travel and end-of-year expenses, December’s Federal Reserve rate cut arrives at a critical time.

With so many people swiping cards, booking trips, and trying to save during the holidays, even a small rate cut can make a noticeable difference. But many people are asking if there be another rate cut in 2026.

The month’s quarter-point rate cut set off a chain reaction that touches nearly every part of your financial life, just as many households are navigating the most expensive time of year.

Banks will begin lowering returns on high-yield savings accounts, CDs and checking accounts, meaning your holiday cash reserves won’t grow as quickly, but borrowing becomes more affordable.

After a federal cut, interest rates on credit cards, auto loans, personal loans and future mortgages generally drift downward. That could help families when financing big holiday purchases or planning major expenses in early 2026.

It also makes refinancing more attractive for anyone locked into older, higher rates, which could be a potential budget booster heading into the new year.

Economists say lower rates can even spur hiring, giving workers more stability going into 2026.

So, for this holiday season, saving may earn you less, borrowing may cost you less and refinancing could soon save you money.

As for 2026, the Fed is signaling just one potential rate cut, but that could change quickly as the economy shifts.