As high inflation continues to take a toll on household finances, nearly half of U.S. adults feel the impact on their emergency savings. According to a new report by Bankrate, 49% of Americans have either less or no emergency savings compared to a year ago. Shockingly, more than one-third of U.S. adults overall say their credit card debt outweighs their emergency savings, marking the highest in 12 years of polling.
The report finds that only 26% of Americans have more emergency savings this year, while 25% say their level of savings is about the same. Millennials and lower-earning households are more likely to have not had any emergency savings last year and still not have any this year. Across both age and income levels, at least one-third say they are likely to have fewer emergency savings now than last year.
Furthermore, most U.S. adults cannot afford a $1,000 emergency expense, making building emergency savings a lofty goal for many. As such, more than one-third of U.S. adults strive to focus on increasing emergency savings while paying down debt.
Mark Hamrick, Bankrate's senior economic analyst, highlights the challenges Americans face amidst high inflation and rising interest rates. "Many have resorted to tapping their emergency savings if they have it, or have taken on credit card debt, or some combination. Adding to the challenge is the record high level of credit card interest rates, punitive for those who fail to pay off their balances immediately."
For those wisely focused on managing and building their emergency savings, Hamrick recommends taking advantage of the increase in interest rates. Emergency savings, by definition, needs to be liquid or easily accessible. A high-yield savings account dedicated to this purpose is a self-insurance policy guarding against unplanned expenses.
As inflation continues to impact Americans' financial well-being, it is crucial for individuals to prioritize building their emergency savings. With a volatile economy and unpredictable future, having a safety net can provide peace of mind and financial security.
Methodology:
This study was conducted for Bankrate by SSRS on its Opinion Panel Omnibus platform. The SSRS Opinion Panel Omnibus is a national, twice-per-month, probability-based survey. Interviews were conducted from January 20-23, 2023, among a sample of 1,032 respondents in English (1,007) and Spanish (25). This survey was conducted via web (1002) and telephone (30), while surveys before 2023 were conducted entirely via telephone. The margin of error for total respondents is +/-3.7 percentage points at the 95% confidence level. All SSRS Omnibus data are weighted to represent the target population.
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