This a direct connection between interest rate and the spending patterns of individuals. Low interest rates have a tendency to convince individuals to purchase goods and services when they can’t really afford do it. Low rates mean that the individual will spend less money on the goods and services. So, more often than not, the product is purchased. As a result individuals can acquire debt rather quickly. In addition, even though an interest rate may be low, individuals over time end up spending more for the goods and services that their original quoted prices. Low interest rates can tricky and one must be very careful. Debt is always the problem in this case. The higher the rate of credit card interest or mortgage interest, the less cash we have. The higher the rate of savings interest the more money we have. If something will cost far more than it is worth because you do not have the money to buy it, then you should wait until you can afford it and stay out of debt. Very low interest may tempt many to go into debt to buy the item now, but high interest is just plain ridiculous to pay. Interest rates dictate the amount a buyer can qualify for or if a buyer can qualify at all.

High interest has a tendency to deter individuals from buying goods and service that they feel are too expensive to afford. As a result individuals will not acquire so much debt. Higher interest rates mean that the product in the end is much more expensive than its original sales price. People who do not have the cash will not buy. High interest rate products are easy to avoid. The purpose of purchasing a certain produce depends on the interest rate. If the interest rates are higher than instead of spending money for purchasing new things people go for saving to get interest on their money. In short you can say with increase in interest rates the purchasing power of people decreases.