What’s Higher, Your Credit Card Debt or The Balance in Your Emergency Account?

From February 2 to 5, 2012, Bankrate.com hired Princeton Survey Research Associates International (PSRAI) to conduct a poll of 1,006 U.S. adults about financial security. The overall financial situation was still viewed as negative. Approximately 27 percent of responders had a lower level of financial security now, compared to a year ago; while only 24 percent reported a higher level.  There was a slight increase in emergency savings and job security.

Savings

There wasn’t much of a change in emergency savings compared to the prior year. Of those polled in February 2012, 54 percent of Americans had more emergency savings than credit card debt; 25 percent had more credit card debt than emergency savings; 16 percent had neither credit card debt nor emergency savings.  Comparing this to a year ago, 52 percent of Americans had more emergency savings than credit card debt, 23 percent had more credit card debt than emergency savings, and 19 percent had neither credit card debt nor emergency savings.

Those most likely to have more in emergency savings than credit card debt were retirees, college graduates, and households with annual incomes of $75,000 and more.  Parents are the most likely to have more credit card debt than emergency savings. Those most likely to have neither credit card debt nor emergency savings were households with incomes of less than $30,000 annually, those with a high school education or less, and the unemployed.

Responders were somewhat less negative about savings in the past three months. More felt about the same about savings, compared to a year ago; 38 percent were less comfortable with their savings now, compared with one year ago; and only 14% were more comfortable.

Job Security and Net Worth

Responders were slightly positive about job security, with 20% feeling more secure than one year ago, and 19% feeling less secure (up from 17% in January).

“Emergency savings remains a problem area for many Americans, which leaves them only one unplanned expense away from having high-cost debt,” said Greg McBride, CFA, Bankrate.com’s senior financial analyst. “Long-term unemployment, stagnant wage growth and rising household expenses are all contributing to this trend. As difficult as it may be to boost savings, having an adequate emergency savings cushion is critical to maintaining financial stability, and Americans need to find ways to sock away more cash for a rainy day.”

Where are you with savings?  Do you have more credit card debt than emergency savings?

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Report, Credit Score, Debt, Money & Identity

This post was written by John Ulzheimer