More than a quarter of Americans have more credit card debt than they do in emergency savings, according to a new survey released by Bankrate on Thursday. However, the personal finance company found that 49 percent find themselves in the opposite circumstance.
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The number of U.S. adults who have more credit card debt than emergency savings went down by one percent when compared to last year’s 29 percent. It is also on par with the highest level seen between 2011 and 2018, which ranged between 21 and 28 percent.
Conversely, the number of U.S. adults who have more in emergency savings than credit card debt increased by five percent from last year’s 44 percent. Though, at the same time, they are not saving as much as they used to. Between 2011 and 2018, American emergency funds surpassed credit card debt with a range that fluctuated between 51 and 58 percent, according to Bankrate.
“High rate credit card debt should be attacked with urgency,” said Bankrate Chief Financial Analyst Greg McBride, who is also a designated Chartered Financial Analyst.
“Utilize zero percent balance transfer offers, trim other expenses, and generate additional income through freelance work or a second job to make 2020 the year you pay off credit card debt for good,” he advised in an official statement from Bankrate.
Forty-five percent of American households told Bankrate that they are prioritizing emergency savings growth over paying down debt. On the flip side, 38 percent of American households said they are prioritizing debt elimination over boosting their emergency savings.
Six percent of American households said they are focused on prioritizing both simultaneously, but an alarming eight percent said they aren’t prioritizing either.
Younger Millennials between the ages of 24 and 30 were found to be more likely to have more credit card debt than emergency savings when compared to their older counterparts. In fact, 46 percent of young Millennials have more in credit card debt while 35 percent have more in emergency savings.
Consequently, this young demographic is more focused on increasing their emergency savings. Older Millennials who are between the ages of 31 and 39, on the other hand, are more focused on paying down their debt than boosting their emergency savings.
Having a large emergency fund tends to become more important with age, according to Bankrate’s findings. When comparing the 46 percent of young Millennials that have credit card debt to those who are age 66 and older, Bankrate observed a significant decline. Only 15 percent of those 66-year-olds and above had more credit card debt than emergency savings.
“It takes time to build emergency savings and it is a moving target as expenses increase from young adulthood to middle age,” McBride noted. “The habit of regular saving is critical to starting, growing, and replenishing your emergency savings cushion.”
Bankrate created its survey with a sample of 1,011 respondents.