About 36% of respondents in a new survey said they have more credit card debt than emergency savings, up from 22% a year ago.
The economy's rapid rebound from the pandemic, combined with a surge in inflation, caused the Federal Reserve to spend 2022 hiking its benchmark interest rate to slow down growth. The move almost immediately created higher borrowing costs for consumers with auto loans, mortgages and credit card balances. A record share offor their car note now that auto loans rates are north of 6% for new and used vehicles.
Another sign that consumers are feeling the financial pinch: credit card debt reached a record high of $986 billion, the Federal Reserve Bank of New York"[S]tubbornly high prices and climbing interest rates may be testing some borrowers' ability to repay their debts," Wilbert van der Klaauw, an economic research advisor at the New York Fed, said in the report.
Bankrate polled roughly 1,000 people and asked about their credit card debt, their savings account balance and how they're planning to pay down debt. Respondents said inflation or being unemployed are the biggest barriers keeping them from saving more. Nearly 15% of respondents said they have no credit card debt or savings.
"It is quite stunning that such a high percentage of adults have no savings and no credit card debt," 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."
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