Today I review, link to, and excerpt from CBS News‘ “MoneyWatch: Most Americans can’t afford a $1,000 emergency expense, report finds“. By Anne Marie Drummond Lee
Edited By Alain Sherter
Updated on: January 23, 2025 / 7:20 PM EST / CBS News
All that follows is from the above resource.
Whether it’s a busted refrigerator, car trouble or medical issues, unexpected costs are a part of life. But even such routine curveballs often spell serious financial trouble for many Americans.
That’s according to a new Bankrate report that surveyed more than 1,000 U.S. adults about their ability to handle a surprise bill. Despite the country’s current low unemployment rate, the annual study found that 59% of Americans in 2025 don’t have enough savings to cover an unexpected $1,000 emergency expense.
“We are essentially a paycheck-to-paycheck nation,” Bankrate Senior Economic Analyst Mark Hamrick said in a statement. “Fewer Americans have the equivalent of a financial safety net to cover inevitable unexpected expenses, despite low unemployment and steady growth. This is one of the consequences of elevated prices stemming from inflation, the impacts of which are still being felt.”
Although inflation has cooled to an annual rate of 2.9% as of December, prices for food, shelter and many other items remain elevated. Consumers also have found that many common products, from snacks to paper towels, have gotten smaller, a retailing tactic known as “shrinkflation aimed at cutting a manufacturer’s costs.
Younger Americans worry most
To be sure, the meteoric rise in the cost of food, housing and health care over the past several years has made it hard for many households to make ends meet, let alone save money. Bankrate’s survey shows that 73% of Americans said they’re saving less for unexpected expenses, compared with 68% in 2024.
“Though inflation is no longer rising as quickly as it did in recent years, more people this year feel the economy has affected their savings,” according to the Bankrate report.
Younger Americans tend to have the strongest concerns about their savings. A whopping 80% of Gen Zers worry about being able to cover immediate expenses if they were to suddenly lose their primary source of income, compared with 72% for Millennials and Gen Xers. Some 58% of Baby Boomers say they regularly fret about having enough money put away, a particular concern given that many are already retired.
Borrower nation
Only 41% of Americans said they would be able to tap their savings to cover an unexpected $1,000 expense, according to Bankrate’s report. That’s down 3% from 2024 and the lowest the percentage since 2021 (39%)
Another 25% said they would use a credit card to pay for a $1,000 bill, 13% said they would turn to a family member for the money and 5% said they would take out a personal loan. In total, about 43% of respondents told Bankrate they would have to borrow money to pay for an emergency expense of $1,000.
That’s a concern given consumers collectively owe a record $1.14 trillion in credit card debt, figures from the Federal Reserve Bank of New York show. Meanwhile, credit card rates continue to soar, hovering round 24%.
“The cost of living continues to rise, prompting more individuals and households to turn to credit cards when in a bind,” Hamrick said. “They are a terrific tool when used wisely and effectively. But with interest rates still high, we need to avoid a deepening debt burden which could make it more challenging to save.”
Another 13% of Americans said they would pay for a surprise $1,000 debt by curbing their spending, On a positive note, while 36% of adults said their credit card debt exceeded what they had in emergency savings, Bankrate found that more than half of survey respondents, at 55%, had more emergency savings in 2024 than credit card debt. That’s the highest percentage since 2018.
Asked how much they have in emergency savings, 28% of respondents said they had enough to cover six months of expenses; 16% said they had enough to cover three to five months; 29% had enough to cover less than three months’ worth of bills; and 27% said they had no emergency savings at all.
