Nearly Half of U.S. Adults Have Less or No Savings Compared to One Year Ago
A recent Bankrate report found that 49 percent of U.S. adults have either less or no emergency savings compared to a year ago, including 39 percent who have less savings than last year, and 10 percent who had no savings last year or this year. More than one-third (36 percent) of U.S. adults said their credit card debt outweighs their emergency savings, which rose substantially from 27 percent in 2021 and 22 percent in 2022.
“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,” said Mark Hamrick, Bankrate’s senior economic analyst. “Many have resorted to tapping their emergency savings if they have it, or have taken on credit card debt, or some combination.”
According to The Hill, the nation’s credit card debt hit a record $930 billion at the end of 2022, and interest rates are around 19 percent for existing accounts and 22 percent for new applicants. Just over half of U.S. adults have more emergency savings than credit card debt at 51 percent, which marks two straight years of decline with 54 percent in 2021 and 53 percent in 2022.
At least one-third of U.S. adults are likely to report less savings than a year ago across ages and income levels, but millennials and lower income households are more likely to have had no savings last year or this year. Roughly 45 percent of millennial and Gen X respondents reported credit card balances greater than their emergency savings.
A similar trend was found among income levels, as Americans earning less than $50,000 annually are five times more likely to have no savings last year or this year (15 percent), compared to three percent of those earning more than $100,000 a year.
To improve their financial livelihood, 34 percent of U.S. adults are focused on increasing savings and paying down debt, compared to 32 percent who are only focused on increasing emergency savings and 23 percent who are only prioritizing paying down debt.
“For those wisely focused on managing and building their emergency savings, this is an opportune time to benefit from the increase in interest rates,” Hamrick said.