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Why Do Interest Rates Matter?

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So why do interest rates matter?

Interest rates represent the cost of capital that people and companies need to take on when they borrow money .So you would think that when interest rates rise, the cost of debt becomes more expensive, which means people and companies will spend less.

You would think correctly. 

Let's just talk about this in the micro before we get macro. So let's talk about you before we talk economy. 

Your credit card interest rate moves down. Great, I have more cash staying in my account and less leaving it. Now I can spend more. I can spend more on restaurant food, clothes, electronics, travel and vacations.   

Know that house you've always wanted? Now with lower interest rates, you can buy that house, financing much of the transaction with inexpensive debt. Go crazy. Go get that house. 

Now to see how this all impacts corporations and your investment portfolio, what the video above.  

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