Emergency savings dynamic shifts to positive for first time in three years

Having an emergency fund is a standard piece of financial advice, but too many Americans ignore it, or have relied on these savings for everyday expenses during the inflation spike. But things may be turning a corner.

For the first time since 2022, an annual barometer of emergency savings nationwide shows that more people have added to their fund than withdrawn money from it. The Bankrate poll reveals that 30% of respondents have added to their savings (the same share as a year ago and up from 26% in 2023) compared to 27% that have depleted their savings (down from 32% in 2024 and 39% in 2023). In 2022, just 24% had added to their savings compared to 34% who reduced savings.

The research also looked into the share of people who have credit card debt versus emergency savings and found that 36% of people have more credit card debt than emergency savings, while 53% have more savings than credit card debt, and 13% have neither.

“The number of households reporting more savings than one year ago has been steadily increasing since we began measuring it in 2022, and for the first time exceeds those reporting less savings than the prior year,” said Bankrate chief financial analyst Greg McBride, CFA. “This is evidence that as the pace of inflation has slowed, it has enabled more Americans to make progress in building, or rebuilding, their emergency savings.”

Asked if they had credit card debt that is greater than their emergency fund, 50% of younger Millennials (29-35 year olds) said so compared to 39% of Gen Xers (45-60), 35% of older Millennials (36-44), 27% of Gen Zs (18-28), and 13% of older Baby Boomers (71-79).

Around one third of respondents are equally prioritizing building their emergency fund and paying down credit card debt, 28% are focusing only on emergency savings, and 24% are only focused on their credit card debt.

“With more than one-third of Americans prioritizing both emergency savings and credit card debt, it underscores how many households are in the position of having both high cost credit card debt and being under-saved for emergencies,” added McBride. “Dispatching with costly credit card debt and boosting emergency savings are two big steps toward building a more stable financial foundation.”