You'd think that lower interest rates would help out struggling borrowers. Yet while the Federal Reserve has moved repeatedly to cut rates, the positive effects of those cuts aren't getting to those who need them most.

The Fed's moves have already lopped 2.25 percentage points from the federal funds rate, and with another meeting later this week, many are expecting another full point on top of that. Although the Fed controls only short-term interest rates, its actions inevitably have an impact on the entire bond market and often cause longer-term rates to stabilize or fall as well.

This time, it's different
Unfortunately for many borrowers, however, the Fed's actions aren't having the effect they might have hoped for. After dropping substantially in January, mortgage rates have risen back toward the range they traded in before the Fed started making cuts.

The news isn't entirely bad. Home equity loans, many of which have variable rates tied to the prime rate, have seen interest rates decline along with the Fed cuts. Those with mortgage resets tied to short-term rates may see some relief. And many credit card borrowers are seeing lower interest charges -- although some issuers have bucked the trend and are actually raising rates.

But just because rates are falling, that doesn't mean you'll be able to take advantage of them. Because of tighter credit terms, you won't necessarily be able to get a loan. Falling home prices mean that you may not have equity left in your home to borrow against. It's a bad situation for everyday borrowers and consumers.

Too many priorities
And it could easily get worse. With Bernanke and his crew busy putting out fires in the financial sector, the focus is squarely on the needs of financial institutions. The bailout of Bear Stearns (NYSE: BSC) by JPMorgan Chase (NYSE: JPM) is just the latest example of actions the Fed has taken with large Wall Street firms in mind. With its precipitous rate cuts, the Fed has clearly communicated its willingness to sacrifice savers by trimming the income they depend on from bank deposits and CDs.

Furthermore, ordinary people can't expect any aid from the financial institutions themselves. With an ongoing need for additional capital infusions, companies such as Citigroup (NYSE: C) and Bank of America (NYSE: BAC) aren't going to be in a hurry to do anything that will cut profit margins, even as rates get more favorable for them. In addition, some analysts believe that mortgage rates are more than a full percentage point higher than they should be, given current yields on Treasuries. That's symptomatic of pullbacks by stronger lenders such as Wells Fargo (NYSE: WFC) and US Bancorp (NYSE: USB) from more aggressive lending practices that were necessary to retain market share during the housing boom.

What to do
If you're a borrower, the best step you can take is to clean up your personal balance sheet. Especially with the stock market falling, there's no better investment you can make than to get rid of credit card debt. No matter how much rates drop, you can always expect that carrying a balance on your credit card will be the biggest drag on your finances.

Until the financial sector finds some stability, you should expect Ben Bernanke and the Federal Reserve to pay less attention to the needs of ordinary consumers and borrowers like you and me. By taking the reins on your finances, however, you can get through tough times and emerge in a stronger financial condition for you and your family.

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Fool contributor Dan Caplinger has done what he can to get his debt under control. He doesn't own shares of any companies mentioned in this article. The Fool's disclosure policy never ignores you.