The Latest Personal Finance News for January 2026

Federal Reserve Divided on 2026 Rate Cuts

While the inflation rate continues to stay slightly elevated, the Federal Reserve slashed its federal funds rate in three consecutive meetings to end the year, cutting its rate by a total of 75 basis points, or 0.75%, in 2025. The central bank's final cut brought the rate to a range of 3.5% to 3.75%.

However, the Federal Reserve is deeply divided on what comes next. According to the federal agency's latest summary of economic projections, Fed policymakers show significant disagreement about the path forward in 2026.

The Federal Open Market Committee's (FOMC) dot plot, which shows where each policymaker expects rates to land, reveals a wide split. For example, more than half of the Fed's policymakers expect rates to go lower this year—most anticipate the rate to end the year in the 3% to 3.5% range, but some expect it to go as low as 2% to 2.5%.

At the same time, a handful of policymakers forecast that the rate will either stay the same or even increase slightly, so there are no guarantees.

Why It Matters

Lower interest rates from the Fed typically translate to reduced borrowing costs on credit cards, auto loans and personal loans. However, the Fed's cautious approach and divided outlook mean consumers shouldn't expect dramatic relief in 2026.

While some rate cuts are likely, they'll be gradual and measured. For Americans carrying debt or planning major purchases, this means interest rates will remain elevated for much of the year, keeping monthly payments higher than they were just a few years ago.

What You Can Do

• Learn about the federal funds rate.
• Understand how the Fed rate cuts impact your finances.
• Find out how Fed rate cuts affect credit cards.
• Look for ways to reduce your risks when borrowing money.

Tax Season Set to Begin

The IRS has yet to announce when the filing season begins for the 2025 tax year, but it's generally set for the end of January. Whether you're expecting a W-2 form as an employee or a 1099 form as a contractor, your employer or client should send it to you by January 31 at the latest.

Why It Matters

The deadline to file your tax return and pay anything you might owe isn't until mid-April. However, it's a good idea to complete the process as soon as you can to avoid the possibility of falling victim to tax fraud.

If you're owed a refund, the sooner you gain access to that cash, the better.

What You Can Do

• Find out which documents you need to file your return.
• Read up on tips to make tax filing easier.
• Make sure you know the 2026 tax deadlines.
• Figure out what to do with your tax refund.

Mortgage Rates Remain Largely Flat

Despite the Federal Reserve cutting its benchmark rate three times in 2025, mortgage rates have barely budged. The average 30-year fixed-rate mortgage sat at 6.21% as of December 18, 2025, which isn't much lower than the 6.26% average when the Fed began cutting rates in September, according to Freddie Mac. The rate has held within a narrow 10-basis-point range over the past two months.

The disconnect stems from how mortgage rates are determined. Unlike credit cards and other short-term loans that move in lockstep with Fed policy, mortgage rates follow 10-year Treasury yields, which respond more to long-term economic forecasts, inflation expectations and fiscal policy uncertainty. With the Fed's divided outlook on future rate cuts and persistent inflation concerns, Treasury yields—and by extension, mortgage rates—have remained stubbornly elevated.

Why It Matters

For prospective homebuyers and those hoping to refinance, the relief they expected from Fed rate cuts hasn't materialized. Monthly mortgage payments remain elevated, and housing affordability continues to be a major barrier for many Americans.

What's more, experts don't expect rates to drop meaningfully below 6% in the near term, which means high borrowing costs will likely keep many would-be buyers on the sidelines well into 2026.

What You Can Do

• Stay on top of the current mortgage rates.
• Read up on mortgage rate forecasts for 2026.
• Learn about how mortgage interest works.
• Consider whether now is the right time to buy a house.

Compare mortgage rates

Check today’s rates to find the best loan offers. Staying updated on current rates helps you secure a competitive mortgage and save more over time.

Student Loan Wage Garnishment Set to Resume

The federal government will begin garnishing the wages of student loan borrowers in default starting in early January 2026, marking the first time paychecks have been at risk since collection activity halted during the COVID-19 pandemic in March 2020. The U.S. Department of Education plans to send notices to approximately 1,000 defaulted borrowers during the week of January 7, with that number increasing monthly throughout the year.

More than 5 million federal student loan borrowers are currently in default—defined as missing payments for more than 270 days—and that figure could climb to roughly 10 million soon, according to the Education Department. The federal government can seize up to 15% of a borrower's after-tax income to put toward their debt.

Why It Matters

Losing up to 15% of take-home pay will significantly impact household budgets for those already dealing with high costs of living and elevated interest rates. Borrowers who have been delinquent or in default should act quickly to explore repayment options before garnishment begins, as processing times for rehabilitation programs could become lengthy once collection activity ramps up.

Consumer advocates recommend that borrowers contact the government's Default Resolution Group to pursue options such as loan rehabilitation or income-driven repayment plans to avoid wage garnishment.

What You Can Do

• Contact your student loan servicer to confirm your loan status.
• Learn more about the federal collections process.
• Research options for when you can't pay your student loans.
• Review your options for getting out of student loan default.

Good Credit Can Contribute to a Healthy Financial Plan

While there are aspects of your financial situation that are outside of your control, building and maintaining a good credit score can help you weather challenges and save money in the long run.

With Experian's free credit monitoring service, you'll get access to your FICO^® Score^Θ and your Experian credit report. With this information in hand, you can gauge your credit health and target areas of your credit profile that you can improve over time. And with real-time alerts whenever your report is updated, you can spot potential issues and fraud and address them quickly.