The American Dream Accelerates Away From Those in the Slow Lane

 Those who borrowed or refinanced at pandemic-era near-zero rates—companies and homeowners with both sense and a solid credit score—haven’t been hit by the highest rates in four decades. 

Who has been hit hard: Borrowers who didn’t qualify for long-term fixed-rate loans and people who want to borrow now.

Borrowers with lower credit scores take loans that are more expensive and often don’t have fixed rates. Credit-card rates soared as the Fed tightened, from a postpandemic low of 16% to almost 23% for borrowers who don’t pay in full each month. 

The same goes for firms. Low-rated junk-bond issuers continued to issue short-dated bonds in 2021 while sturdier investment-grade companies locked in low rates for, on average, the longest this century. 

The combination of higher prices and higher interest rates has been toxic for many low-end consumers—especially the young. T

he share of borrowers younger than 30 missing three monthly credit-card or auto-loan payments reached the highest last year since the 2008-09 financial crisis

James Mackintosh Wall Street Journal 20 March 2024


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