How Will Today’s BoC Announcement Affect Our Credit Cards and Car Loans?
April 29, 2026. The Bank of Canada announced this morning that its benchmark interest rate will remain at 2.25%. This rate has been held steady for several consecutive meetings, reflecting the bank’s cautious approach to economic conditions influenced by geopolitical factors and global market volatility.
While the benchmark rate remains unchanged, what is the impact of this rate hold on other financial instruments that consumers use, such as credit cards, mortgages, student loans, auto loans, and savings accounts?
Let’s take a quick look at each:
Credit Cards: Most credit cards have variable interest rates that track the Fed’s benchmark. After the Fed cut rates three times in the second half of 2025, the average annual percentage rate (APR) has remained just under 20%, according to Bankrate.
“Without any additional rate cuts, there’s not much reason to expect meaningful declines anytime soon, so carrying a balance will continue to be very expensive,” warned a leading credit analyst at one of Canada’s top five banks.
Mortgage Rates: Fixed mortgage rates do not directly follow the Fed but usually align with long-term Treasury rates. Concerns about the impact of the Iran war on the U.S. economy have already pushed the average rate for a 30-year fixed-rate mortgage to 6.38% from 5.99% at the end of February.
As a result, homeowners with existing low mortgage rates may feel “stuck.” What that means is that when mortgage rates remain static and do not decline, borrowing activity tends to slow.
Student Loans: Federal student loan rates are also fixed and are influenced in part by the 10-year Treasury note, which provides some protection for most borrowers against Fed changes and recent economic uncertainty.
Current interest rates on undergraduate federal student loans issued through June 30 are 6.39%, according to the U.S. Department of Education. Interest rates for the upcoming school year will be determined in part by the May auction of the 10-year note.
Car Loans: Auto loan rates are affected by several factors, including the Fed’s benchmark rate. With financing costs remaining elevated, new-car buyers are opting for longer loan terms to keep their monthly payments manageable, according to recent Edmunds data.
Even so, with the rate on a five-year new-car loan nearing 7%, the average monthly payment for a new car rose to $773 in the first quarter of 2026, an all-time high.
Savings Rates: While the Fed does not directly influence deposit rates, yields tend to correlate with changes in the target federal funds rate.
As a result, although rates on certificates of deposit (CDs) and high-yield savings accounts have fallen from their recent peaks, they still exceed the annual rate of inflation. Currently, top-yielding online savings accounts and one-year CD rates offer around 4%, according to Bankrate.
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