February 27, 2021

Bucks: Will Low Rates Influence Your Behavior?

In an article for Monday’s paper, my colleague Motoko Rich and I discussed how the Federal Reserve’s decision to keep interest rates low for the foreseeable future might not be enough to entice consumers to take on more debt.

After all, the threat of another downturn is keeping people with jobs on their best financial behavior. And the unemployed (and underemployed) are worried about staying current on their existing debts, and probably would not qualify for new loans anyway.

At the same time, consumers have been shedding their existing debts over the past few years, yet household debt levels remain historically high.

But since consumer spending is one of the large engines that drive the nation’s economy, this presents a conundrum. As the article states, many economists argue that the economy cannot get back to true health until the debt level comes down. But credit, made attractive by low rates, is a time-tested way to kick-start consumer spending.

Are you planning on changing your spending and borrowing behavior? Are you confident enough with your financial position to take on new debt? And if you recently applied for a new loan or mortgage, was it difficult to qualify?

Please drop your thoughts in the comment section below.

Article source: http://feeds.nytimes.com/click.phdo?i=7d1f6c48fbd054751e7f79fcbe2b139a

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