TULSA, Okla. — As prices for basic necessities like groceries and monthly bills continue to rise, many Americans are turning to their emergency savings to bridge the gap.
According to new information from Bankrate, over one-third of U.S. adults dipped into their emergency savings in the past year.
Greg McBride of Bankrate said, "Over half of those who tapped into their emergency savings said they needed $1,000 or more."
Many individuals used their savings to cover unexpected expenses, such as unplanned vehicle repairs or medical bills, or to assist family members and friends. McBride said, "But what was alarming were the high percentage of those that used it for monthly bills."
- 38% like rent or utilities.
- 32% things like food or supplies
"Underscoring how stretched household budgets are and their sensitivity to fluctuations in income," said McBride.
Many individuals struggle to build up their emergency savings.
McBride advises, "Even if you don't have much to set aside, place it in an FDIC-insured high-yield account."
He highlights that top-yielding online savings accounts nationwide pay yields over 4%, and many have no minimum deposit, making them accessible to nearly everyone.
"When choosing an online bank," McBride suggests, "always deal directly with a federally insured bank or credit union. Avoid third-party fin-techs that partner with banks, as this carries risks."
Every household needs to have emergency savings. The best place to put that is an online savings account where you're going to get uh a very attractive rate of return. You have the protection of FDIC insurance, and you can get in with very little in the way of initial deposit.
For easy access during emergencies, he also recommends linking your savings account to your regular checking account.
"68% of Americans say inflation and high prices is the obstacle that keeps them from either from saving or just being able to save more than they currently are," said McBride.
Key Insights from Bankrate on Tapping Emergency Savings:
- Over one-third (37%) of Americans tapped their emergency savings in the past year.
- Roughly 80% of those who did so to cover an unplanned emergency expense, monthly bills, or day-to-day expenses.
Common Reasons for Tapping Emergency Savings:
- 51% for unplanned emergency expenses (such as medical bills or car repairs).
- 38% for monthly bills (like rent or utilities).
- 32% for day-to-day expenses (like food or supplies).
- 22% to help family members or friends.
- 21% to pay down debt.
- 19% for non-essential reasons, such as vacations or discretionary spending.
Amounts Drawn from Emergency Savings:
- About 26% said they used between $1,000 and $2,499.
- Another 22% reported using between $500 and $999.
- 15% said they used $5,000 or more.
- 14% reported using between $2,500 and $4,999.
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