2 important banking changes in 2025 that everyone should know about

The last couple of years have been strange for banks. Rising interest rates have pushed rates on such savings accounts to extremely high levels and made borrowing money so expensive that some people have had to rethink their home-buying plans and other major decisions.

But gradually the situation begins to change. While we can’t predict exactly what bank interest rates will be next year, we can be pretty sure we’ll see the following two changes.

1. Bank accounts will earn less interest.

Interest rates on savings accounts and certificates of deposit (CDs) have already fallen from a high of 5.00% per annum and are expected to fall further. Experts predict two more Fed rate cuts before the end of the year, followed by four more cuts in 2025.

The Fed’s rate cuts do not directly affect bank account interest rates, but banks generally follow whatever the Fed does. It’s almost certain that banks will quickly cut their rates following an upcoming rate cut, although your bank may not cut rates by the same amount.

Savings accounts will feel this the worst because their interest rates are variable. However, if you open a Discover® Online Savings accountyou can rest assured that even if rates fall, you will continue to receive a rate well above the national average, no matter what happens. This is true for all high yield savings accounts.

CD owners won’t notice the changes immediately because CD rates are typically fixed for the life of the CD. However, those hoping to open new CDs should act quickly before the next rate cut, expected on November 7th. If you wait longer, you may have to settle for a lower rate than what’s available today.

2. Loans will become more accessible

While the loss of interest on a bank account is disappointing, it can be largely or entirely offset by cheaper borrowing costs for those who currently have or plan to take out a loan in the near future. Expect rates on mortgages, personal loans and other types of loans to become more affordable throughout 2025.

If you’re hoping to refinance your existing mortgage, consider waiting until at least mid-2025. Refinancing comes with closing costs, so you only need to do it once during this rate-cutting cycle. By waiting for a few more rate cuts to occur, you may be able to secure a lower rate.

If you are planning to buy a new home, delay your purchase until 2025 if possible. If not, you may also want to consider refinancing in the future.

Just because it’s not time to make a move yet doesn’t mean you can’t compare some of the top refinance lenders. Many of them allow you to pre-qualify online without impacting your credit score, so you can figure out which rates are offering you the best rates. Then keep checking back every month or two to see what the rates are. Once they reach a level you are comfortable with, apply.

Just keep in mind that when rates drop, many people try to refinance, and this can cause home appraisals to fall behind. This process may take a little longer than expected to complete. If you have any questions about what you should do, contact your bank or the refinancing lender you are considering to discuss your options.