The Federal Reserve finally cut its benchmark rate by 25 basis points on Sept. 17. That marked its first rate cut of 2025, and the Fed penciled in another two rate cuts by the end of the year. Declining interest rates often drive investors back toward higher-risk growth stocks or higher-yielding dividend stocks.
However, lower rates are generally a mixed bag for many financial stocks. For traditional banks, lower rates can spur more lending activity, but they’ll reduce the net interest income banks generate from those loans. Lower rates can also make savings accounts and CDs less appealing.
But looking beyond traditional banks, there are still plenty of financial stocks that could thrive as interest rates decline. Let’s take a closer look at three of those promising plays.
This post originally appeared at The Motley Fool.