The concerning percentage explains why, in spite of declining inflation and low unemployment, so many individuals continue to be pessimistic about the state of the economy.
A recent Bankrate research claims that 36% of Americans have more credit card debt than emergency funds. In the twelve years since Bankrate included the subject in its yearly survey, that represents the greatest proportion of respondents to express this opinion.
Sixty-three percent of American adults said that their inability to save for unforeseen expenses is primarily due to inflation.
One major obstacle preventing greater progress in the area of savings has been inflation. Thankfully, increased interest rates have also resulted in more substantial returns on savings, according to a poll released on Wednesday by Mark Hamrick, senior economic analyst at Bankrate.
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Rising Interest Rates Worsen Financial Strain for Americans, Affecting Savings and Emergency Readiness
However, as demonstrated by the sharp increase in credit card rates over the past year, higher interest rates can also negatively impact finances. Forty-five percent of the study participants attribute their decreased contributions to savings accounts to rising interest rates.
21% of Americans said they would use their credit cards to cover an emergency need of $1,000 or more and pay it off over time, despite those growing credit card rates and skyrocketing balances.
However, they run the risk of slipping further behind their budgetary objectives by doing so. Almost one in four respondents, or 22%, said they have no emergency funds at all. This is a one percent drop from the 23% of Americans who said they were in the same risky situation last year.
66% of American adults expressed concern that they wouldn’t have enough emergency savings to meet living expenses for a month if they suddenly lost their job.
All PostsWithout these reserves, anyone—including those without credit—runs the danger of experiencing extreme financial stress or worse in the event of a large unforeseen bill like a costly home or auto repair.
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