Majority of Americans Cannot Afford Emergency Expenses

Less than half of Americans (41%) say they would use savings to pay for an emergency expense of $1,000 or more, according to a new Bankrate survey.

A majority of Americans (59%) cannot afford a $1,000 emergency expense, and more than two in five (43%) say they would borrow the money in some form.

That includes 25% who say they would use a credit card and pay it off over time to cover the expense, up from 21% in the previous year’s poll and the same level as a similar survey published in early 2023.

Furthermore, 13% say they would reduce spending on other things, while another 13% say they would borrow money from friends or family.

Just 5% say they would take out a personal loan to cover a $1,000 emergency expense, and 4% said that it would be for something else.

Over two-thirds (68%) say they are saving less for unexpected expenses because of inflation, while 47% blame elevated interest rates, and 45% point to a change in income or employment status.

 Nearly three in four Americans (73%) say at least one of these factors (inflation, higher interest rates, or change in income/employment status) is causing them to save less for unexpected expenses.

Furthermore, more than three in four (76%) of Gen Xers and millennials are pointing to this as a reason for saving less.

When considering how the loss of a primary source of household income would impact their finances, a majority of Americans (69%) say they are very or somewhat worried (including 46% who are very worried) that they would not be able to cover their immediate living expenses over the next month.

This is an increase from 66% in 2024. On the other hand, 31% say they are not too worried or not at all worried about covering immediate living expenses if they were to lose a primary source of income.