The biggest winners and losers of Wednesday's Fed decision
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The biggest winners and losers of Wednesday's Fed decision
Yahia Barakah January 28, 2026 at 1:26 PM
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The biggest winners and losers of Wednesday's Fed decision (Douglas Rissing via Getty Images)
The Federal Reserve kept interest rates unchanged at its first policy meeting of 2026, pausing its rate-cutting campaign after three consecutive reductions last year. The decision, announced this afternoon, surprised no one.
Why the hold? The labor market remains stubbornly slow as 2025 marked the weakest hiring year outside a recession since 2003. Meanwhile, inflation, while moderate, continues to drift higher as tariffs push consumer costs up across the board. Caught between anemic job growth and rising price pressures, policymakers chose to step back and assess whether last year's cuts are working.
The decision unfolds against an unusual political backdrop. Fed Chair Jerome Powell faces political pressure from President Trump and an ongoing Justice Department investigation. His term as chair expires in May without a clear successor. Yet the Fed's focus stays on economic data, and right now that data suggests patience makes sense.
What does a Fed pause mean for your wallet? Let's break down who wins and loses when rates stay put.
How the Federal Reserve decides on rates
There's no single person responsible for the Federal Reserve's decisions. Instead, the Federal Open Market Committee (FOMC) announces federal funds rate targets based on votes from 12 people, which includes the seven members of the Federal Reserve Board of Governors, the president of the New York Federal Reserve Bank and a rotating roster of four regional Fed presidents.
The FOMC gathers for two-day meetings eight times a year to review economic data, discuss policy options and — importantly — vote on interest rate changes. The committee announces its policy decisions at the end of each meeting, and the Federal Reserve chair holds a press conference to explain their thinking.
The Fed weighs several key factors when setting rates, including inflation trends, the strength of the job market, economic growth and how rate changes will affect the economy. The central bank can raise, lower or hold rates steady to support its dual mission of keeping inflation to 2% while maximizing employment. In other words, keeping prices low and Americans employed.
Big winners when the Fed holds steady1. High-yield savers
A pause can be a gift if you’re earning a strong APY on cash. Many online banks still offer high-yield savings rates around 3.50% to 4.00% APY, while some big banks pay close to zero on standard savings accounts.
These yields, which are influenced by the Fed rate, reflect how much your money grows in a year. A Fed hold gives you extra time to earn higher interest before any potential cuts. Online banks can often offer better yields because they have fewer overhead costs than branch-heavy banks, and that can show up as higher APYs and fewer account fees.
These savings rates can fall once cuts restart. But a high-yield account can still beat the near-zero rates at banks like Chase and Bank of America, so it’s often worth parking your cash somewhere that actually pays you.
Here's how much you'd earn on $10,000 in savings as rates drop:
Year 1
Year 3
Year 5
4.00%
$400
$1,249
$2,167
3.75%
$375
$1,168
$2,021
3.50%
$350
$1,087
$1,877
3.25%
$325
$1,007
$1,734
💡 Smart move: Use rate pause periods to open a high-yield savings account and benefit from its rates. Compare current offerings across multiple online banks and consider moving money from your traditional savings accounts to high-yield alternatives.
2. CD shoppers
Certificates of deposit (CDs) are like savings accounts with a time commitment. You agree to leave your money untouched for a specific period, typically ranging from three months to five years, and the bank guarantees you a fixed interest rate that won't change for that entire time.
During pause periods, you can take time to build a CD ladder without worrying about missing out on higher rates tomorrow. Simply split your money across multiple CDs with different maturity dates. Instead of putting $20,000 into one five-year CD, you could put $5,000 each into CDs that mature in six, nine, 12, and 24 months. This gives you access to some money regularly while still locking in your rates and earning more than regular savings accounts.
💡 Smart move: During a rate hold period, consider moving money you won't immediately need into CDs. When each CD matures, evaluate the rate environment before reinvesting: if rates appear likely to rise, roll into shorter terms (three to six months) to capture future increases. If rates seem likely to fall, lock into longer terms (two to five years) to maintain current yields.
3. Mortgage shoppers
Stable lending conditions help both homebuyers and people considering refinancing their existing mortgages. While rates may not get much better during pauses, they also won't get much worse, giving you consistent conditions for major financial decisions.
Rate pauses eliminate the stress of trying to time your purchase around Federal Reserve meetings. You can focus on finding the right home and negotiating the best deal without worrying about rates moving before you close on the loan. Refinancing candidates get time to properly evaluate multiple lenders, compare terms and calculate break-even points without rates moving around constantly.
💡 Smart move: During rate pauses, focus on shopping for different mortgage options rather than trying to time rate changes. Get quotes from at least three different lenders and negotiate fees to find the best total cost of borrowing, not just the lowest rate.
Biggest losers when the Fed holds steady1. Rate watchers
If you've been holding off on major financial moves hoping rates would drop, Fed pauses can feel frustrating. Whether you've been delaying a home purchase or putting off refinancing while waiting for cheaper borrowing costs, extended pauses push potential rate savings further out of reach.
Business owners feel this pinch too. If you've been planning expansion based on expected rate cuts, you might need to revise your strategy to account for higher loan costs or delayed equipment purchases or facility expansions.
💡 Smart move: Don't postpone important financial decisions based on Federal Reserve speculation. If you need to refinance, buy a home or make major purchases, focus on finding the best available terms today rather than waiting for potentially better conditions that may never come.
2. Car buyers
A Fed pause can keep borrowing costs from falling as quickly as buyers would like. That matters if you’re shopping for a car loan, because you’re more likely to see financing costs stay elevated while the Fed is on hold.
The tricky part is that the sticker price is only half the story. When rates are high, the cost to finance your car can add a substantial amount to your total. A slightly longer term can make the monthly number look friendlier, but it can also quietly add a lot more interest over time.
💡 Smart move: Shop your auto loan the same way you shop the car. Get preapproved from a bank or credit union, compare offers, then negotiate from a position of strength. And don’t get hypnotized by the monthly payment. Focus on the total loan cost, including the interest rate, fees and the full amount you’ll pay over the life of the loan.
3. Borrowers with variable rates
Extended pauses in a high-rate environment trap people with variable-rate debt at elevated costs when they should be benefiting from the flexibility these loans typically offer. People with adjustable-rate mortgages (ARMs), home equity lines of credit (HELOCs) and business owners with variable-rate commercial loans all face this challenge.
These loans often carry rates tied directly to the "prime rate," which banks charge their best customers and typically sits about 3% above the Fed rate. So if you have a HELOC at prime plus 1%, you're currently looking at about 7.75%.
💡 Smart move: Consider fixed-rate borrowing options such as personal loans or home equity loans. If you have an ARM, you can also explore refinancing it into a fixed-rate mortgage if the numbers work in your favor.
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FAQs: Fed decisions and your money
Here's what you about protecting and growing your money as the Fed makes rate decisions. And take a look at our growing library of personal finance guides that can help you save money, earn money and grow your wealth.
Should I lock in my mortgage rate?
If you’ve found a mortgage rate that fits your budget, consider using a mortgage rate lock to guarantee that rate for a specific period while you close on your loan. Some lenders offer free rate locks for 30 days, with fees ranging from 0.25% to 1% of your loan amount for longer locks. Rather than trying to time the market, shop around for the lowest rate you're eligible for. See tips in our guide to finding the best rate on your next mortgage.
Can I use a home loan to pay down high-interest debt?
Yes. Typical interest rates on home equity loans are lower than those of the average credit card and personal loan, and could significantly lower the interest amount you'll pay on these separate debts. But there's a lot at stake if you aren't able to repay your home equity loan on time, including the potential loss of your home to foreclosure. Make sure any new loan you take on offers enough wiggle room in your budget for emergencies and unexpected expenses. Learn more about the risks and rewards in our guide to using your home's equity to pay off debt.
Should I move my money into stocks?
Consider shifting some savings into stocks if you’re OK with the risk and potential for loss and have more cash than you need over the short to medium term. Stocks may offer better growth potential when savings and CD rates fall, but keep in mind that past performance doesn’t guarantee future returns. Avoid moving all your money at once — gradually invest over time using a diversified portfolio that matches your risk tolerance. Keep enough cash in a high-yield savings account to cover up to six months of expenses, and avoid investing money you’ll need within the next few years.
About the writer
Yahia Barakah is a personal finance writer at AOL, specializing in investing, banking and credit cards. A Certified Educator in Personal Finance (CEPF), Yahia combines his economics expertise with a genuine passion for helping readers make sense of financial decisions that shape their daily lives and future goals. He's currently pursuing a Certified Financial Planner designation. Yahia's research has been featured on Yahoo, FinanceBuzz and FX Empire, among other publications. When he's not writing about finance, you'll find him freediving and capturing underwater photography along Florida's coast and around the globe.
Article edited by Kelly Suzan Waggoner
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Source: “AOL Money”
