Even with the Federal Reserve expected to raise borrowing rates again next week, adding debt is “not necessarily a bad sign,' analysts say.
The American Express Co. logo, along with those of Visa Inc., Discover Financial Services and Mastercard Inc., are displayed in a shop window in New York. Photographer: Scott Eells/Bloomberg via Getty Images
"The truth is that debt can be either a sign of confidence or struggle, and I suspect we’re seeing the effect of both of those in our data," he said. "Many people take on debt because they feel good about their financial situation and aren’t too worried about paying a little interest if it gets them what they want or need. Plenty of others take on debt because they have to. There’s no question that both situations are happening right now.
Credit cards account for the biggest share of debt — 70% — followed by auto loans at 33% and mortgages at 29%. Medical debt is ranked fourth, but people with bad credit are more likely to have medical debt. About 35% of people with poor FICO scores have medical debt; only 10% of people with excellent credit scores have unpaid medical bills.
"It may sound good in the short run and be done with the best intentions, but sometimes you have to take on a bit of risk to reach greater success," he said.Consumer prices soared 9.1% compared with a year earlier, the government said, the biggest yearly increase since 1981, and up from an 8.6% jump in May. On a monthly basis, prices rose 1.3% from May to June, another substantial increase, after prices had jumped 1% from April to May.
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