With more than 60% of Americans living paycheck-to-paycheck, building up a savings account has taken a backseat to everyday expenses.
According to Bankrate’s 2024 annual emergency savings report, 57% of U.S. adults would not be able to cover a $1,000 emergency expense.
In fact, 25% said that they would have to put the expense on a credit card, and 4% of respondents said they would have to take out a personal loan to make up the cost.
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“With 1-in-4 Americans telling us they’d react to a large emergency expense by using a credit card, their timing couldn’t be worse,” said Senior Economic Analyst at Bankrate Mark Hamrick. “On average, credit card interest rates are the highest we’ve seen and are slated to go higher as the Federal Reserve continues to hike. Under the best of circumstances, this debt should be paid before costly interest charges hit the account.”
Meanwhile, 68% of respondents surveyed said that they were saving less this year due to inflation, 48% blamed interest rates and 44% said it was because of a change in income.
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The U.S. Federal Reserve is set to meet on January 30 to discuss interest rates, but investors and analysts expect the Fed won’t begin cutting rates in the spring.