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When will personal loan interest rates drop? Experts weigh in
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After years of record-high inflation, and with the expensive holiday season fast approaching, many Americans are looking for some extra money to cover costs.
A personal loan is one option to get those funds. Personal loans can be more affordable than credit cards, and, unlike a home equity loan, they don’t require you to put your house at risk. They’re unsecured debts that can be easy to qualify for. In fact, personal loan options exist even for people with fair credit or bad credit.
Personal loan rates have been higher in the post-pandemic era than in the recent past, though, so many would-be borrowers are wondering if and when rate drops will occur. We asked some experts for their thoughts on when that could potentially happen.
Start by seeing what personal loan interest rate you could qualify for here.
When will personal loan interest rates drop?
Those hoping for lower personal loan rates had some good news lately. “The Federal Reserve Bank here in the U.S. has begun its rate-cutting cycle,” notes Steven Conners, founder and president of Conners Wealth Management in Scottsdale, Arizona.
The Federal Reserve is the country’s Central Bank. It reduced rates by 50 basis points in September and by 25 basis points in November. These were the first-rate cuts since the Fed began raising rates in the post-pandemic era to combat inflation.
However, while the Federal Reserve sets the benchmark interest rate, it does not directly control the rate that banks charge consumers who take out personal loans.
“There are many factors that affect personal loan interest rates including demand for credit, loan delinquencies, the Federal Reserve raising or lowering rates, treasury rates, and government spending,” explains JB Beckett, founder of Beckett Financial Group. “Currently, only one of these factors has positively affected loan rates: the Fed lowering rates two times this year. “
Understanding that the Fed can’t just cut personal loan rates helps explain why borrowing costs on personal loans dipped only slightly during the second quarter of 2024 and rose again in the third quarter. “Despite the Fed lowering rates by .75 since September, average interest rates have not changed as much,” Beckett said.
Start exploring your personal loan options online today.
Rate drops could happen but they may not be quick
While personal loan rates haven’t yet declined dramatically despite the Fed’s multiple rate cuts in the fall of 2024, this doesn’t mean they’re off the table for the foreseeable future.
“If the Fed continues to lower rates over time, it could have a greater positive impact on loan interest rates,” Beckett says. “In addition, if loan demand, loan delinquencies, and treasury rates decrease as well, personal loan interest rates could drop even more.”
The Fed has projected multiple rate cuts through 2026, and if the Central Bank follows through, cheaper access to credit may eventually spur the banks to pass the savings onto consumers in the form of reduced rates.
However, there’s no guarantee that the Fed’s planned rate reductions will occur. “If the economy starts to get going, we may not see another rate cut this year as was previously projected,” warns Domenick D’Andrea, AIF, CRC, CPFA, financial advisor and Co-Founder of DanDarah Wealth Management. “With inflation still too high, the rate cuts might not lower personal loan rates as quickly as one might think.”
D’Andrea did indicate he believes that there will be at least one Fed rate cut in 2025, as well as “hopefully the continuation of lowering inflation.” He said that if this prediction holds, you may not have to wait too long to borrow to get the best rates. “I think that the 25 basis rate cut will be priced into new loan rates, at least at a percent of the 25 basis points in the next few weeks,” he advised.
The bottom line
The reality, of course, is that no one can predict exactly where rates will trend, especially with a new presidential administration taking office in D.C. in January. Because of this uncertainty, those with good credit, solid financial credentials and the ability to qualify for a competitive personal loan may not want to put off borrowing in hopes of slightly lower rates in the future that may take a long time to arrive.
The fact is, personal loans remain affordable relative to credit cards, even at today’s rates, and getting one now could be the right move if you have a pressing need for funds.
Captain Ed Evans began his day well before dawn, preparing Southwest flight 8921 for a nearly 19-hour journey. The year-old Boeing 737 MAX8 flew over 4,000 miles, traveling from Baltimore to Denver, Long Beach, Reno, Las Vegas, Sacramento and back to Las Vegas.
“Planes start in 118 airports where we operate every day, and they could end up somewhere totally different,” Evans said.
For the airline, the holiday season requires precision and efficiency.
“We’re ready to go,” Evans said. “I think we’re in great shape and looking forward to the holiday travel season.”
Thanksgiving week is crunch time for airlines, and Southwest Airlines is expecting a record number of passengers this year, with 4.7 million people flying to or from their holiday destinations.
At each stop, the team works quickly to prepare the plane for its next departure. Ryan Robles, a flight attendant, described it as a race against the clock.
“We’ve got a 45-minute turn, so it becomes very important to be prompt,” Robles said.
Behind the scenes at Southwest Airlines
Meanwhile, ground crews hustle to load luggage and restock the plane. The focus is to load all the bags so the plane can get back out onto the runway.
On this journey, the crew changed multiple times. Flight attendants swapped out twice, and the pilots changed in Reno. In Denver, husband-and-wife team Andrew Witmer and Jordan Baumgarner worked to quickly restock snacks and drinks.
“I’m very competitive,” Jordan said. Andrew added, “We try to race each other.”
Across six flights, the plane carried 698 passengers and 578 checked bags. Among the passengers was Katie Jones, who was taking her 3-year-old son, Clark, to Disneyland for his birthday.
“What do you want to go see? Mickey? The Toy Story ride?” Jones asked her excited son.
Running an airline is no small task, according to Southwest CEO Bob Jordan.
“Everything wants to stay in motion all the time. The minute you stop or slow down, things are out of place,” Jordan explained.
Inside Southwest’s network operation center in Dallas, Sarah Heugel monitored the cross-country journey, watching for turbulence, bad weather, or airport backups that could cause delays.
“We can see pretty much anything that they’re going to encounter and anticipate things to happen,” she said.
As night fell, flight 8921 completed its last stop of the day, remaining on schedule. Its rest would be brief—just seven hours before maintenance checks and a new day of travel.
For passengers, it’s a chance to connect with loved ones during the holidays. For the airline, it’s a delicate dance of coordination and teamwork to keep everything moving.
Israel and the Iran-backed Hezbollah group appear set to halt the war that has killed almost 3,800 people in Lebanon over the last year and left about 16,000 others wounded. President Biden is expected to announce Tuesday that the U.S. and France secured a ceasefire in Lebanon, ending the fighting between Israel and Hezbollah, according to a U.S. official.
The full and permanent ceasefire would end the deadliest war in Lebanon since its civil war ended in 1990.
Under the deal, a full and permanent ceasefire would be implemented immediately. There will be 60 days permitted for the full withdrawal of Israeli forces — a gradual withdrawal to allow the Lebanese forces to mobilize and move in to secure the area, but the trigger time is immediate, set to take effect later Tuesday.
The first peel-off of Israeli troops was to begin within the next 10 days.
Hezbollah is expected to pull its forces and heavy weapons back about 20 miles from the Israeli border, to the Litani River.
An official in Netanyahu’s office told CBS News that the prime minister had convened the country’s security cabinet to discuss the proposal. The cabinet must approve any ceasefire agreement. Netanyahu was also holding meetings Tuesday in Tel Aviv with various government ministers, lawmakers, and mayors from some of the northern towns that have been evacuated for months.
Lebanon’s government also had to unilaterally approve the deal on Tuesday, but the U.S. official said that was expected.
Netanyahu was to address his country at 8 p.m. local time (1 p.m. Eastern) on Tuesday, according to his office, with President Biden then delivering remarks about the agreement in Washington within a few hours.
Hezbollah, a powerful military and political entity in Lebanon that has long been designated a terrorist group by both the U.S. and Israel, started firing rockets into Israel on Oct. 8, 2023, in support of its Hamas allies who sparked the war in Gaza with their terror attack the previous day.
Israel carried out airstrikes on purported Hezbollah targets for months, but in September it dramatically escalated its assault on the Iranian proxy group, including by launching ground operations in the south of Lebanon.
CBS News correspondent Debora Patta said rockets were still flying in both directions over Israel’s northern border on Tuesday, with Israel and Hezbollah trading some of their heaviest fire to date, even as diplomats push for peace.
Ayal Margolin/REUTERS
Under the proposed deal, Lebanese forces and United Nations peacekeepers are expected to jointly patrol southern Lebanon to ensure the terms of the agreement are adhered to. Earlier reports suggested the southern region would be monitored by a multi-nation committee, which would include both the U.S. and France.
Middle East expert Danny Citrinowicz, a fellow at the Atlantic Council think tank, said the deal looked “good on paper,” but added that until it was implemented, “it would be hard to know whether Israel can really build on these kind of guarantees coming from the U.S. administration.”
After more than a year of crossfire, more than 1.2 million people have been displaced from their homes in Lebanon, along with at least 60,000 from towns and villages in northern Israel. They’re all desperate to go home, and Israeli Prime Minister Benjamin Netanyahu has long said the chief objective of the war with Hezbollah, from his government’s standpoint, has been to enable them to do so.
While a deal with Hezbollah appeared closer than ever, negotiations for a ceasefire in Israel’s war with Iran’s other proxy force in the Gaza Strip, Hamas – have gone nowhere.
Many in the decimated Palestinian territory are hungry, and recent rainstorms have made living conditions there even worse. A winter chill has set in, and there were reports of a fresh Israeli strike killing about 15 people Tuesday in Gaza City.
Arden Farhi and
contributed to this report.
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