You Have More Credit Card Debt Than Emergency Savings – Money Perception

Your pile of credit card debt is outgrowing the emergency fund that’s your last hope of paying it off.

According to a study by, just 52% of Americans have more money in emergency savings accounts than they do in credit card debt. That’s unchanged from 2016, but the percentage of Americans with more credit card debt than emergency savings has grown from 22% to 24% over the past year. Unfortunately, about one in six Americans (17%) state they have no credit card debt, but no emergency savings either. Those last folks are just one unplanned expense away from having credit card debt or other high-cost debt.

“Too many Americans haven’t right-sized their savings relative to debt, and even those that have made progress still find themselves with an inadequate amount of savings,” says chief financial analyst Greg McBride.

Already averse to credit card debt after economic crisis, older Millennials (age 27-36) had the highest propensity to have more emergency savings than credit card debt. However, the Silent Generation (age 72+) had the highest likelihood of any age group to have neither credit card debt nor emergency savings, a testament to how many seniors are surviving on a fixed income such as Social Security and a pension without any wiggle room. It isn’t just low-income folks struggling, either: lower middle income households (earning $30,000 to $50,000 per year) are the most likely to have more credit card debt than emergency savings. That situation is about to get much worse before it gets better.

Back in February, the Federal Reserve Bank of New York announced that total household debt increased by $226 billion (or 1.8%) to $12.58 trillion during the fourth quarter of 2016. That’s the largest quarterly increase in total household debt since the fourth quarter of 2013 and $460 billion in debt more than U.S. consumers had amassed a year earlier. It also put debt just 0.8% below its peak of $12.68 trillion in the third quarter of 2008.

Almost every form of debt increased from the same time in 2015. Mortgage debt is up $231 billion to $8.48 trillion. Student loan debt increased $78 billion to $1.31 trillion. Auto loan debt is up $93 billion to $1.16 trillion. Credit card debt climbed by $46 billion to $779 billion. Even all of those figure may be low.

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“Debt held by Americans is approaching its previous peak, yet its composition today is vastly different as the growth in balances has been driven by non-housing debt,” says Wilbert van der Klaauw, senior vice president at the New York Fed. “Since reaching a trough in mid-2013, the rebound in household debt has been led by student debt and auto debt, with only sluggish growth in mortgage debt.”

According to the Federal Reserve in Washington, D.C., revolving debt of all kinds exceeded $1 billion in the fourth quarter of 2016 for the first time since 2008 and returned to that mark again in February. That said, credit card delinquency rates were around 10% the last time revolving debt hit the $1 billion mark in 2008. At the end of last year, only 7% of credit card debt was past due.

“Credit card debt is rising quickly, but delinquencies are still really low,” says Matt Schulz,’s senior industry analyst. “Many Americans are doing a good job of controlling their debts, but eventually with big debts and rising interest rates, it’s likely that something will have to give. I expect delinquencies to start rising more quickly in 2017.”

About 12% of U.S. adults with debt expect to die in debt, down from 21% about a year ago, according to a new report. Yet just 4% of those between ages 18 and 29 feel they’ll die in debt, compared to 28% of those 65 and older who feel the same.

Though 24% of American adults tell they are currently debt-free, up from 14% in 2014, those of you who are in debt thanks to credit cards, car loans, student loans, mortgages, etc., are in deep trouble. According to the Federal Reserve Bank of New York, student loan debt ($1.28 trillion, up $76 billion) and auto loan debt ($1.14 billion, up $90 billion) have ballooned within the last year. It also doesn’t help that credit card debt has also soared ($747 billion, up $33 billion).

“While it’s good to see Americans feeling better about their debt, I’m worried that some people are getting carried away,” Schulz says. “For example, credit card debt has been rising steadily for more than five years and is close to $1 trillion, according to the Federal Reserve. It seems like a lot of people are forgetting the painful lessons of the Great Recession.”

Financial site NerdWallet just completed its annual survey of household debt and found that the average household with credit card debt has a balance of $16,061.That household, assuming an interest rate of 18.76%, pays a total of $1,292 in credit card interest per year on $7,941 in debt — which is just $523 less than WalletHub considers unsustainable for a median household income of little less than $52,000.