Emergency savings lag credit card debt for a third of households

Survey breaks down generational differences in financial stability amid high-interest-rate environment.

As the impact of the Fed’s campaign of rate hikes since 2022 continues to filter through the US economy, a new Bankrate survey finds that an alarming 36 percent of American households are burdened with more credit card debt than they have in emergency savings.

The trend has persisted for two consecutive years, according to Bankrate, and marks a record high since the survey’s inception in 2011.

Overall, only 30 percent of respondents to Bankrate’s 2024 emergency savings survey said they have more savings for emergencies today compared to a year ago, and nearly one-third (32 percent) said they have less.

“At a time of record-high credit card rates, we see a record-high number of Americans carrying credit card debt that exceeds their emergency savings,” said Greg McBride, Bankrate’s chief financial analyst.

After several consecutive holds from the Federal Reserve, market observers have been expecting the US central bank to take a dovish turn in 2024. That includes economists at Goldman Sachs, who recently pushed back their forecast of a Fed rate cut by a month.

McBride highlighted a pattern of growing financial strain across millions of American households, with many financing purchases at interest rates of 20 percent.

The survey also unveiled generational disparities in financial stability. Gen Xers (ages 44-59) and millennials (ages 28-43) report the highest instances of having more credit card debt than emergency savings, at 47 percent and 46 percent respectively.

That’s in contrast to only 32 percent of Gen Zers (ages 18-27) and 24 percent of baby boomers (ages 60-78) who find themselves in similar straits.

More than a third (68 percent) of baby boomers also report their emergency savings surpass their credit card debt – compared to less than half for Gen Z (49 percent), millennials (46 percent), and Gen X (47 percent) – revealing yet another facet of the financial generation gap.

In one instance of good news-bad news, the report found that Americans under 30 are significantly more likely to lack both credit card debt and emergency savings (18 percent, vs. 7 percent of respondents over 30).

Responding to these challenges, many Americans are adopting a more balanced approach to their financial health. Nearly two-fifths of respondents to the survey (36 percent) are simultaneously focusing on paying down debt and boosting their emergency savings, marking the highest reported rate of adoption for the strategy in seven years.

[More: Would you like your 401(k) with a side of emergency savings?]