The Fed could do something today it has not done in 16 years - here's what it means for your 401(K), loans, credit card and mortgage

Investors are waiting anxiously to see whether the Fed cuts by a cautious quarter percentage point, or a more bold half percentage point - a move it has not made in 16 years.

The Fed has not lowered interest rates at all since 2020.

And it has not lowered borrowing costs by a half percentage point at one time since the midst of the financial crisis in late 2008.

As of writing, investors were predicting a 57 percent chance of a 50 basis point cut, and a 43 percent chance of a 25 basis point cut, according to the CME FedWatch Tool.

An interest rate cut of any size will have an impact on Americans' finances - from credit cards and savings accounts to 401(K)s and mortgages.

The Fed has held benchmark borrowing costs at a 23-year high between 5.25 percent and 5.5 percent since July 2023, following an aggressive rate hiking campaign to curb inflation.

The Fed is grappling with mixed economic data as it makes its rate cut decision.

Inflation is heading in the right direction toward the central bank's 2 percent target.

This is down from a 2.9 percent annual rate in July - and is the lowest rate of yearly price growth since February 2021.

But recent reports on employment and manufacturing have revealed some signs of softening, which have been cause for concern for some economists.

Markets were badly shaken by a weaker-than-expected jobs report in July, which saw unemployment increase to the highest level since October 2021.

Wall Street is braced for the Fed announcement, and any big market reaction could impact 401(K) savings.

Workplace retirement accounts tend to be invested in major indices including the S&P 500 and the Dow Jones Industrial Average, so will be impacted by major stock market moves.

Americans holding money in high-yield savings accounts are likely to be the most disappointed by an interest rate cut.

The competitive rates offered by some banks are likely to come down in line with the Fed's move, but by how much and how quickly will vary depending on the provider.

The Fed's benchmark interest rate does not directly affect mortgage rates, but home loan costs dip when banks think Fed cuts are likely.

Mortgage rates have fallen to their lowest level since February 2023.

The average 30-year fixed rate mortgage is now 6.20 percent, as of latest Freddie Mac data from September 12.

A Fed rate cut should mean mortgage rates continue their downward trajectory, providing a boost for those looking to refinance or buy a home.

Experts hope this would begin to get the stagnant housing market moving.

Elevated mortgage rates have been a deterrent for homebuyers for the last several years, while sellers 'locked' into cheaper loans have been reluctant to sell.

But a more gradual easing of rates may have unintended consequences for the housing market, CNN reported.

A slower decreasing of interest rates may not do much to jolt owners, especially those who secured early-pandemic-era, less-than-3 percent mortgages, to move.

This could mean that there are more people looking to buy homes, but a lack of properties for sale - which could push up prices even further.

The Fed has held interest rates at a 23-year high since July 2023, which has made borrowing money expensive and piled pressure on American households.

A cut will have an impact on many aspects of your financial life - but consumers will have to wait longer to feel relief in some areas than in others.

Rates for credit card and personal loans should finally decrease when the Fed decreases rates, providing some respite for borrowers.

The average APR offered with a new credit card is currently 24.92 percent, according to LendingTree.

Any cut in rates would be welcome respite for consumers who have relied more heavily on credit cards to cope with elevated prices after several years of inflation.

Total credit card balances in the US have surpassed $1 trillion.

But how much credit card lenders will cut rates by is unknown.

APRs are set by banks, so any decrease will not be instant and will depend on the bank and the type of card.

Fed watchers are undecided as to how big of a cut the central bank could make to interest rates at the close of its latest meeting Wednesday.

Typically, markets have a general idea as to what will happen at the meeting, but that is not the case this time.

'I hope they cut 50 basis points, but I suspect they'll cut 25. My hope is 50, because I think rates are just too high,' Mark Zandi, chief economist at Moody's Analytics, told CNBC.

'They have achieved their mandate for full employment and inflation back at target, and that's not consistent with a five and a half percent-ish funds rate target. So I think they need to normalize rates quickly and have a lot of room to do so.'

There is reportedly an unusual division among Fed policymakers who have typically voted the same way on interest rate decisions.

'My guess is they’re split,' former Dallas Fed President Robert Kaplan told the outlet earlier this week.

'There'll be some around the table who feel as I do, that they're a little bit late, and they'd like to get on their front foot and would prefer not to spend the fall chasing the economy.'

There will be others, he added, that want to be more careful and manage risk.