Bankrate’s 2023 annual emergency savings report

An uncertain economy is affecting how Americans are able to save for emergencies. Nearly half (49 percent) of U.S. adults have less savings (39 percent) or no savings (10 percent) compared to a year ago, according to a new Bankrate survey.

This data comes from Bankrate’s yearly emergency savings report, an exclusive survey done by Bankrate and polling partner SSRS. Since 2014, the survey has annually polled 1,000+ U.S. adults about their level of emergency savings. The most recent data, polled in January 2023, also examines whether people have more credit card debt or emergency savings, and if they’re prioritizing paying down debt or building their emergency savings.

The percentage of people who have less emergency savings than a year ago increased since Bankrate asked the question in 2022, when 34 percent of people had less savings year-over-year.

It’s clear that the less-than-optimal economy, including historically high inflation coupled with rising interest rates, has taken a double-edged toll on Americans. Many have resorted to tapping their emergency savings if they have it, or have taken on credit card debt, or some combination.

— Mark HamrickBankrate senior economic analyst

Key statistics on emergency funds and personal savings

Over 1 in 3 Americans have more credit card debt than emergency savings — highest on record since 2011 polling

Source: Bankrate survey, Jan. 20-23, 2023

Over a third (36 percent) of people have more credit card debt than emergency savings, the highest percentage in 12 years of Bankrate asking this survey question. In comparison, 22 percent of people had more credit card debt in January 2022, while 28 percent of people had more credit card debt in January 2020, before COVID-19 began to affect the U.S.

The majority (51 percent) of U.S. adults still say the amount in their emergency fund or savings account is higher than their credit card debt. The smallest percentage of people (13 percent) said they have no credit card debt and no savings.

“It is quite stunning that such a high percentage of adults has no savings and no credit card debt,” Bankrate Senior Economic Analyst Mark Hamrick said. “Anyone with no such savings, including those without access to credit, risks tremendous stress, or worse, on their personal finances when hit with a significant unplanned expense such as a major home or auto repair.”

Income and education have a correlation with people taking on more credit card debt than building their emergency savings. Nearly half (42 percent) of those without a college degree have more credit card debt than emergency savings, while only 29 percent of college graduates have more credit card debt. Similarly, 41 percent of those making less than $50,000 a year have more credit card debt than emergency savings, while 28 percent making at least $100,000 have more credit card debt.

Millennials and Gen X are most likely to have more credit card debt than emergency savings

Source: Bankrate survey, Jan. 20-23, 2023

Millennials (ages 27-42) are the generation most likely to have more credit card debt than emergency savings, with 45 percent saying they have more credit card debt. Only 25 percent of baby boomers (ages 59-77) say they have more credit card debt.

Year-over-year, more people of all ages said they have more credit card debt than savings, but Gen X (ages 42-57) saw the largest jump. This year, 44 percent of Gen Xers have more credit card debt than savings, up from 24 percent in 2022.

Younger generations are more likely to have no credit card debt or emergency savings: 22 percent of Gen Z and 17 percent of millennials have neither, compared to 6 percent of Gen X and 9 percent of baby boomers.

Competing priorities: building emergency savings vs. paying down debt

Source: Bankrate survey, Jan. 20-23, 2023

In periods of economic uncertainty, it’s a good idea to try to pay down debt quickly and build up your emergency savings in case of a loss of income. It’s not always possible to do both at once, but Bankrate’s survey found a little more than a third (34 percent) of people are prioritizing both paying down debt and focusing on increasing emergency savings.

Gen Z (ages 18-25) are the most likely of any generation to prioritize savings, at 46 percent, while Gen X are more likely than other generations to prioritize paying down debt, at 27 percent. Baby boomers (ages 59-77) are more likely than other demographics to say that neither is a priority for them, at 18 percent.

“For those wisely focused on managing and building their emergency savings, this is an opportune time to benefit from the increase in interest rates,” Hamrick said. “Emergency savings, by definition, needs to be liquid or easily accessible. A high-yield savings account dedicated to this purpose amounts to a self-insurance policy guarding against unplanned expenses.”

Almost 4 in 10 have less emergency savings than they had a year ago

Source: Bankrate survey, Jan. 20-23, 2023

Only 26 percent of people say they had more emergency savings in January 2023 than they did a year ago, and 39 percent have less.

Only 25 percent of people have roughly the same amount of savings as they did in 2022, compared to 2021, when 33 percent of people said their savings were about the same year-over-year.

Women are more likely than men to not have savings a year ago or now (13 percent of women compared to 6 percent of men).

Millennials are the most likely generation to not have any savings a year ago or now, at 16 percent, compared to the next-highest generation, Gen X, at 9 percent. The same can be said for 8 percent of Gen Zers and 5 percent of baby boomers.

Less than half of adults would pay for a large expense with their savings — a quarter would pay with a credit card instead

Source: Bankrate survey, Dec.16-19, 2022

Instead of using savings, 25 percent of people would pay for an unexpected $1,000 expense using a credit card while paying it off over time — the largest percentage saying they would use a credit card in the history of Bankrate’s survey since 2014.

Source: Bankrate surveys, 2019-2023

“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,”  Bankrate Senior Economic Analyst Mark Hamrick said.

“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.”

Generally, 40 percent of people, instead of using their emergency savings account, would need to borrow the money in some form: using a credit card and paying it off over time (25 percent), borrowing from friends and family (11 percent) or taking out a personal loan (4 percent).

Younger generations are less likely to pull from savings to cover a surprise expense

Source: Bankrate survey, Dec.16-19, 2022

At 56 percent, baby boomers (ages 59-77) are more likely than younger generations to pay from savings when faced with an emergency expense. Gen Xers (ages 43-58) are the most likely to say they would pay for an emergency expense with a credit card and pay it off over time, at 29 percent.

Only 31 percent of Gen Z would pay for an emergency from savings — the smallest percentage of any generation. That’s significantly down from January 2022, when 42 percent of Gen Z would pay for a $1,000 emergency from their savings.

Willingness to pay a surprise expense from savings also rises as people report higher household incomes. 23 percent of people in households making less than $50,000 a year would pay for an emergency expense from savings — the least of any income level — compared to 71 percent of people in households making $100,000 a year.

Additionally, 60 percent of those who graduated college would pay a $1,000 expense from savings, compared to only 29 percent of those with a high school diploma or less.

Men were far more likely than women to say they would pay a $1,000 expense from savings, with 50 percent of men reporting they would do so, versus 37 percent of women. Women were more likely to finance a surprise expense with a credit card at 27 percent, compared to 22 percent of men.

Nearly 3 in 4 are saving less due to economic factors such as inflation, rising interest rates and employment changes

Inflation led to rising prices over the last year for everyday goods like groceries and gas, leading to fewer people being able to save for emergencies — 74 percent of people said economic factors such as inflation/rising prices, rising interest rates or changes in income or employment caused them to save less.

A significant portion of those with lower incomes and less education are saving less due to economic factors —  80 percent of people in households making under $75,000 a year were saving less due to at least one economic factor, compared to 64 percent of people in households making over $100,000 or more per year. 78 percent of those with a high school education or less were saving less, compared to 68 percent of those with an undergraduate college degree or more.

Source: Bankrate survey, Dec.16-19, 2022

When comparing different economic factors, 68 percent of people are saving less due to inflation or rising prices, up from 49 percent in January 2022.

The number of people who have not had their savings impacted by inflation nearly halved since January 2022. Only 17 percent of people said that inflation and rising prices are not having an impact on their savings, significantly down from 33 percent of people who said so in January 2022.

Older millennials, or those between 34 and 42, are the demographic most likely to be saving less due to inflation, with 76 percent saying they’re saving less. Also, 62 percent of those with a college degree said they were saving less due to inflation, compared to 71 percent of those without a college degree.

How rising interest rates are impacting savings

Just under half of U.S. adults (48 percent) said that they were saving less due to rising interest rates. “One of the upsides of rising interest rates is the more generous returns being paid on savings,” Hamrick said. “For those who have been or are planning to sock money away for emergencies, it truly pays to shop around for the best rates, as high-yield savings yields are the highest since 2008. This is a situation where having more money to work with, including higher yielding returns, can make an important difference.”

How changes in income or employment status are impacting savings

Of all economic factors Bankrate surveyed about, people said that a change in income or employment status was the least likely cause for them to save less; however, 44 percent of people are still saving less due to a change in income or employment. 20 percent said that a change in their income or employment status is causing them to save more and 36 percent said those changes aren’t having an impact.

Gen Zers are the most likely to be saving more due to a change in income or employment status, with 33 percent of Gen Zers saving more, versus only 10 percent of baby boomers.

More than 2 in 3 Americans would be worried about having enough emergency savings to cover a month’s worth of living expenses

Source: Bankrate survey, Dec.16-19, 2022

Creating a savings cushion typically starts with building three months of emergency savings in case of losing your job or taking an income hit. However, Bankrate’s survey shows most people are concerned about having that landing pad.

68 percent of people say they would be worried they wouldn’t be able to cover their living expenses for a month if they lost a primary source of income tomorrow, including 45 percent who would be very worried. Only 14 percent of people would not at all be worried.

If put in an income pinch, women would be much more likely to be worried about being able to afford a month of living expenses (72 percent), compared to men (64 percent).

Non-White Americans are also more likely to be worried about affording a month of their living expenses than White Americans. 63 percent of Hispanic Americans and 54 percent of Black (non-Hispanic) Americans said they were very worried, compared to only 39 percent of White (non-Hispanic) Americans.

More than 3 in 4 millennials and Gen Zers are worried about their emergency savings levels

Source: Bankrate survey, Dec.16-19, 2022

85 percent of Gen Zers would be worried about their ability to pay for a month’s living expenses if they lost a primary source of income, the most of any age group. 79 percent of millennials would be worried, compared to 69 percent of Gen Xers and 53 percent of baby boomers.

Those with a lower yearly income or less education are far more likely to be worried about their ability to cover a month’s expenses if they lost their primary income.

• 82 percent of those in households earning under $50,000 a year would be concerned about their ability to cover a month’s expenses.
• 48 percent of those in households making over $100,000 would be worried.
• 77 percent of those with a high school education or less would be worried.
• 52 percent of those with a college education or more would be worried.

3 tips on building your emergency fund amidst high inflation

Building an emergency fund can be a lifeline if your income decreases or you lose your job. Here are three tips on how to start and maintain an emergency fund to prepare for uncertainty.

1. Figure out how much you need in emergency savings

Experts commonly recommend saving three to six months of expenses in case of emergencies. For example, if your monthly bills total $2,000 a month, saving $6,000 will allow you to pay your bills for a short time if you lose your main source of income. This is not a concrete rule; you may need to save more if you are self-employed and anticipate a lean month, or if you are preparing for the possibility of a recession.

2. Open a savings account just for emergencies

Different savings accounts can allow you to stash emergency funds safely and allow you quick access when you need them. An online savings account, money market account, money market mutual fund or a separate savings account with your existing bank or credit union can allow you to save emergency funds.

3. Make a budget around savings

You may already have a budget in place to make room for saving more, but make sure you stick to your good habits. Rebuilding your savings, or starting to save for the first time, can be easier by automatically transferring money to your savings each month or taking on side hustles for more income.

Methodology

The study (that was conducted in January 2023) was conducted for Bankrate by SSRS on its Opinion Panel Omnibus platform. The SSRS Opinion Panel Omnibus is a national, twice-per-month, probability-based survey. Interviews were conducted from January 20-23, 2023 among a sample of 1,032 respondents in English (1,007) and Spanish (25). This survey was conducted via web (1002) and telephone (30), while surveys prior to 2023 were conducted entirely via telephone. The margin of error for total respondents is +/-3.7 percentage points at the 95% confidence level. All SSRS Omnibus data are weighted to represent the target population.

The study (that was conducted in December 2022) was conducted for Bankrate by SSRS on its Opinion Panel Omnibus platform. The SSRS Opinion Panel Omnibus is a national, twice-per-month, probability-based survey. Interviews were conducted from Dec. 16-19, 2022 among a sample of 1,028 respondents in English (1,003) and Spanish (25). The survey was conducted via web (998) and telephone (30). The margin of error for total respondents is +/-3.5 percentage points at the 95 percent confidence level. All SSRS Omnibus data are weighted to represent the target population.