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More than 60% of Americans live paycheck to paycheck, making building a savings account take a backseat to everyday expenses.
According to Bankrate’s 2024 Annual Emergency Savings Report, 57% of U.S. adults cannot cover a $1,000 emergency expense.
In fact, 25% said they would need to pay their expenses to a credit card, and 4% of respondents said they would need to take out a personal loan to cover expenses.
Related: How self-employed people can make the most of their retirement savings
“With one in four Americans saying they would use a credit card for a large emergency expense, the timing couldn’t be worse,” said Mark Hamrick, senior economic analyst at Bankrate. Stated. “On average, interest rates on credit cards are the highest we’ve ever seen and are set to rise even further as the Federal Reserve continues to raise rates. In the best of circumstances, this debt will have high interest rates on your account. It should be paid before it starts.”
Meanwhile, 68% of survey respondents said they saved less this year because of inflation, 48% said it was because of interest rates, and 44% said it was because of changes in income.
Related: Should you consider a high-yield savings account?
The Federal Reserve is scheduled to meet on Jan. 30 to discuss interest rates, but investors and analysts don’t expect the central bank to start lowering rates in the spring.
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