What a Federal Reserve Rate Cut Means for Your Finances

The Fed cut rates again, easing borrowing costs—but savers may earn less, and relief for loans and credit cards could take time.

In this Sept. 24, 2013 file photo, freshly cut stacks of $100 bills make their way down the line at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas. LM Otero/AP

NEW YORK—The Federal Reserve cut its benchmark interest rate by a quarter point Wednesday for the second time since September. Before that, it had gone nine months without a cut.

The federal funds rate is the rate at which banks borrow and lend to one another. While the rates consumers pay to borrow money aren’t directly linked to this rate, shifts affect what you pay for credit cards, auto loans, mortgages, and other financial products.