One-Quarter of Americans Would Use Credit Cards for $1,000 Emergency

In a time when credit card interest rates are high and credit card debt is decades old, a quarter of Americans would resort to credit cards to pay for an emergency of $1,000.Inflation high.

25% of those surveyed by Bankrate in a February 23rd survey said they would use a credit card to pay for an emergency $1,000. That’s up from 20 percent a year ago and marks the largest percentage of people who said they would use a credit card for that purpose since 2014.

Only 43% said that they would finance the $1,000 emergency expense with savings.

There are other options for meeting emergency expenses such as taking up surveys “reduce your spending on other things,” Twelve percent of respondents chose this option. One-third of respondents said that they would borrow money from family or friends, while the remaining 4% claimed they would get a personal loan.

“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,” Mark Hamrick, Bankrate senior economic analyst, said in the Report.

“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.”

According to data from “a href=”https://www.creditcards.com/news/rate-report/”>Creditcards.comOn February 17, 2021, the average national interest rate on credit cards was 16.12 per cent. It rose to 20.34% as of Feb. 22, 20,23.

Credit card debt versus emergency savings

In the 2023 Bankrate survey, 36% of respondents claimed to have more. Kreditkarte debt This is higher than the emergency savings rate, which is the highest in 12 years. The number last year was 22 percent.

Men had 51 percent more emergency savings saved than women, while women only had 48 percent. The credit card debt of men was 32 percent, compared with 40 percent for women.

45 percent of millennials have more credit card debt that emergency savings. Generation X has 44 percent, Generation Z 38 percent, and the baby boomers 25 percent. Only 51 percent of respondents had savings or emergency funds that exceeded credit card debt. Thirteen per cent did not have savings or credit cards debt.

“It is quite stunning that such a high percentage of adults has no savings and no credit card debt,” Hamrick stated.

“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.”

The survey was carried out in January with the participation of more than 1,000 American adults.

According to the U.S. Bureau of Labor Statistics data, January’s annual inflation was 6.4 percent. Since January 2022, the annual inflation rate has been above 6 percent in every month. This is well above the Federal Reserve target rate of 2 % inflation.

US Credit Card Debt

According to the Federal Reserve, the total credit card balance for Americans increased by $61 billion to $986 trillion in quarter four of 2022. Data The Federal Reserve Bank of New York. This is the highest total since 1999.

According to LendingTree data, Connecticut ranked first among states with highest credit card debt per capita. According to LendingTree data, Connecticut residents had an average credit card debt $9,408, New York $9,165 and New Jersey $9,044, Rhode Island $8,728, Texas $8,701.

A Survey NerdWallet released a January survey of over 2000 adults across the U.S. and found that 69 % were worried about their finances in the coming year. Only 45 percent stated their pay had not increased in the 12 months prior to inflation.

A combination of rising interest rates and revolving debt, as well as an increase in credit card fees paid by households, has led to an increase in the average credit card payment.

“Credit card debt is often thought to be the result of frivolous spending, but for many Americans, that’s just not true,” Sara Rathner is a NerdWallet expert on credit cards.

“Consumers are feeling the squeeze of higher prices and interest rates, and paychecks just aren’t keeping up. That’s forcing many to make tough decisions, like going into debt to pay for necessities.”