Growing Pains in America: Too Much Credit Card Debt vs Emergency Savings

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It really should be nothing new that too many Americans have far too little saved up for a rainy day. It also shouldn’t be all that shocking to hear about Americans having too much credit card debt. That said, it should be alarming that there are some 74 million Americans who have more credit card debt than they have in emergency savings.

According to, only 44% of American households have more emergency savings than credit card debt. What else should be alarming from this survey of 1,044 people is that the reported 29% of Americans with more credit card debt than emergency savings was the highest rate in nine years.

Another issue is how many Americans have little or no credit and little or no savings. Bankrate’s survey showed that 18% have neither credit card debt nor emergency savings at all, and that is a three-year high and up from just 12% a year earlier. This study indicated that one-third of the lowest income households, those with under $30,000 income, have no credit card debt and no emergency savings.

There was shown to be a big deterioration in American households’ emergency savings relative to credit card debt from just a year ago. Bankrate also suggested that the larger deterioration was across genders, ages, education levels and income brackets. It even showed that the credit deterioration was present regardless of political party affiliation.

Currently, some 41% of Americans are said to be focused on paying down debt. While that was barely changed from last year, there was a notable decline (from 53% down to 43%) in those focused on boosting emergency savings. This is a serious mistake in the making, with slower economic trends and with the odds of a recession rising ahead. Bankrate suggests that having a larger cushion can help ride out a period of economic difficulty.

Greg McBride, chief financial analyst at, said of the report:

Consumers should make hay while the sun shines. Now is the time – with unemployment low and wages rising – to right-size the equation by paying off high cost credit card debt and adding to emergency savings. Sadly, it looks like we’re collectively moving in the wrong direction… The sharp deterioration in the relationship between credit card debt and emergency savings is an ominous indicator of the financial health among American households.

Higher income households and those headed by college graduates are said to be two to three times more likely to have more emergency savings than credit card debt. Middle income and lower income households are more evenly split.

There are differences in priorities among ages as well. Those who are aged 55 and higher are twice as likely to have emergency savings exceeding their credit card debt. Millennials (23 to 38 years old) were the only generation shown to be more focused on paying down credit card debt than boosting emergency savings. Those in Generation X, baby boomers and those who are in their 70s and up were all more focused on increasing their emergency savings.

Bankrate’s suggestion is for Americans with higher credit card balances to start paying down that debt. This is for consumers to transfer high-interest credit card balances to 0% balance transfer cards and also to create a realistic plan for paying off the amount owed during the interest-free period. By focusing on the big four living expenses (shelter, transportation, food and social), the suggestion there is to start looking for ways to reduce those main expenses to help start paying off debt.

While some of these numbers look alarming, the reality is that this has been tracked by only since 2011. There are other critical issues that are seen from time to time in various consumer credit reports. Some reports look more dire than others.

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