According to a new 2023 report from Bankrate, a large percentage of Americans (74%) feel economic factors are causes for their lack of savings. Additionally, 68% blame inflation (up from 49% last year), and 44% say income and employment status are at fault. Here are some report findings, including tips on saving money and battling credit card debt.
Saving Less & Buried in Credit Card Debt
With the current economic state of inflation, it’s no surprise Americans are struggling with their finances. According to Bankrate’s 2023 Annual Emergency Savings Report, Americans are saving less money and experiencing high credit card debt like never before.
Nearly half of U.S. adults have fewer savings or none. The survey unveiled that 36% of Americans have more credit card debt than emergency savings. That is a record high since 2011. In comparison to last year’s numbers (January 2022), only 22% of Americans had more credit card debt than savings or emergency savings. In January of 2020, before Covid-19 hit, 28% had more credit card debt than emergency savings.
Who Has More Credit Card Debt?
Millennials and Gen Xers are getting the brunt of the hit when it comes to piling up credit card debt. In 2023, 45% of Millennials and 44% of Gen Xers claim they have more credit card debt than the previous year. Compared to credit card debt in 2022, only 32% of Millennials and 24% of Gen Xers felt they had more credit card debt than in 2021.
What Is Top Priority?
The survey also asked the generations what is most important: Emergency savings or debt payments? It turns out the overall majority focuses on both (34%), and about a third (32%) focus only on increasing their emergency savings. And 23% of survey participants have a focus on paying down debt.
Although 66% of adults in the U.S. are focusing on both or only emergency savings, you will be surprised at guessing what payment method they would use for a surprise expense. The survey found most adults (44%) would prefer to dig into their savings when an emergency expense pops up. Meanwhile, only 25% would finance with a credit card. Could this be because of the raging credit card debt Americans are experiencing? It could be a coincidence, however, dipping into your savings for surprise expenses may end up saving you from high-interest rates and fees.
Tips for Building an Emergency Fund
|Figure out how much you need in emergency savings
|Open a savings account just for emergencies
|Make a budget around savings
|Experts commonly recommend saving three to six months of expenses in case of emergencies.
|Different savings accounts can allow you to stash emergency funds safely and allow you quick access when you need them.
|Include space to budget in savings
|Use automatic transfers to help with sticking to the budget you have set for your savings.
|Get a side hustle to supplement additional income into your savings budget.
How to Cut Down Credit Card Debt?
There are different ways to chip away at your credit card debt. You can use repayment strategies like debt snowball or debt avalanche. Another option is contacting creditors to set up payment plans, also filing for bankruptcy as a last resort.
One of the most convenient ways to take a stab at your credit card debt is through balance transfers. There are plenty of balance transfer credit card options that may best suit your needs. We highly recommend choosing one with a lengthy intro APR on balance transfers. Debt typically piles on with high-interest rates, so transferring over an existing balance to a card with a 0% intro APR can save you time and money. Consider these balance transfer credit cards.
|BankAmericard® Credit Card
|Citi® Diamond Preferred® Card
|Wells Fargo Reflect Card
|0% Intro APR
|21 months on purchases and transfers
|21 months on transfers, 12 months on purchases
|18 months on purchases and transfers
“It’s clear that the less-than-optimal economy, including historically high inflation coupled with rising interest rates, has taken a double-edged toll on Americans. Many have resorted to tapping their emergency savings if they have it, or have taken on credit card debt, or some combination.” – Mark Hamrick, Bankrate senior economic analyst.
Related Article: Tips for Choosing a Balance Transfer Credit Card
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