The Federal Reserve didn’t raise interest rates this month. But many suspect the United States central bank to give rates a boost sometime in the next couple of months. Whether or not they do it remains to be seen.
Wealthy Americans are bracing for an eventual interest rate hike by the Federal Reserve. One way they’re preparing themselves for a rate increase is to slash their debt, and they’re doing this more than any other time in the past decade.
According to last week’s consumer-sentiment report from the University of Michigan (via Bloomberg News), approximately 15 percent of high-income households had reported declines in debt in the month of September. This is more than any other time since 2005. Those same high-income households reported an improvement in their personal finances.
“The prospects of rising interest rates didn’t cause high-income families to borrow in advance of those hikes—it caused them to pay down their debt,” said Richard Curtin, director of the Michigan Survey of Consumers, in a statement. “It could be that the dodging of the hike this month meant more consumers actually looked at their finances more critically.”
The last time interest rates were increased was in 2006.
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