Are Household Perceptions of Borrowing Costs Creating Spending Headwinds?

Borrowing costs in the form of interest rates on consumer loans can influence the decisions people make about their consumption as they calculate the trade-offs between spending, borrowing, and saving. Using survey data collected in July 2026 by the Consumer Finance Institute at the Federal Reserve Bank of Philadelphia, we show that over one-quarter of respondents chose to forgo borrowing money for a large purchase during the six months preceding the survey. Of that group, half cited high borrowing costs as the reason, indicating that 12.6 percent of all respondents chose not to make a large purchase because they decided borrowing costs were too high. In addition, about 5 percent of respondents decided to make an alternative, less expensive purchase primarily because of the cost of financing that purchase.