Close to one in four Americans have more credit card debt than personal emergency savings, according to a new survey released Monday by BankRate.com. The poll found that debt is certainly taking a toll not only on the federal government but on millions of households across the country.
The survey further discovered that 16 percent didn’t have either credit card debt or emergency savings. Only 55 percent of respondents said they have more emergency savings than credit card debt. The rest of the survey participants stated they didn’t know or refused to answer the question.
It was noted that the results from the website’s survey haven’t changed from the 2012 and 2011 data. The findings from the survey suggested that Americans are having a difficult time saving for an emergency and paying down debt levels, which has gotten worse over the years.
An important piece of data that the survey revealed was those who earned more than $75,000 each year were less likely to have no savings or credit card debt. Those with annual incomes of less than $30,000 are more likely to have no debt and no savings.
Howard Dvorkin, the founder of ConsolidatedCredit.org, pegged the question in the press release: if a majority of Americans have more savings than debt then how come everyone is broke?
“The fact of the matter is that America is broke – whether it’s mortgages, student loans or credit cards, we are broke,” said Dvorkin. “The old rule of thumb is that people should have six months’ of savings. If you talk to people, most don’t have two pennies. Credit card debt will eat you alive no matter who you are.”
Economic Collapse News reported in October that the Commerce Department found that American households are cutting their savings rates in order to spend more, down from 5.4 percent at the height of the financial collapse in 2007/2008. The national savings rate in the United States is close to four percent – many financial experts advise every person should put aside at least 10 percent of their income for a rainy day.
The media release explained that there is an increasing divide in the U.S. between consumers that are content carrying a certain amount of debt, while there are others that strictly adhere to saving each penny.
“It tends to be that debt and savings are very lumpy; you rarely find someone that has both. It’s either someone has a lot of debt and little to no savings, or someone has savings and very little debt,” said Elliott Orsillo, CFA, co-founder of Season Investments in Colorado Springs, Colorado, in the news release. “There isn’t much of a fluid spectrum of people with a ton of savings and no debt and a nice mixture down to people with no savings and lots of debt. It’s usually either one or the other,”
The Federal Reserve announced earlier this month that total consumer debt rose $14.6 billion in December to a total of $2.78 trillion. The increase was mostly due in part to student and automobile loans, while credit card debt fell.
What to do? Save more than you spend. Get rid of your credit card. Live beneath your means.
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