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Are you ready for a “rainy day?”

According to Bankrate.com, a little more than half of Americans (52 percent) are committed to “saving for a rainy day.” Specifically, they have more money in emergency savings accounts than credit card debt.

However, the percentage of Americans with more credit card debt than “rainy day” funds grew from 22 to 24 percent over the past year. While delinquencies remain low, larger balances and growing interest rates could see a growth of severely past-due debts in the future.

Total household income increasing by 1.8 percent during the fourth quarter of 2016 is a promising sign. However, credit card debt grew from $46 billion to $779 billion since 2015.

Of all the age groups, millennials actually have the highest propensity to favor emergency savings over credit card debt. Growing up in the shadow of 2008’s Great Recession may have served as an important lesson to set money aside.

Naturally, low-income people struggle financially. However, lower middle-income households are not faring much better. In fact, people with incomes of $30,000 to $50,000 a year are the most likely to have higher credit card debt balances than money tucked away for possible crises.

One in six Americans has neither credit card debts nor rainy day funds. Those over the age of 72 dominate that segment. Yet, regardless of age, a single crisis without a safety net could lead to high-interest financial burdens.

The ultimate emergency, both personal and financial, that any household can face is the death of a loved one. Ironically, approximately 12 percent of U.S. adults expect to die in debt, a reduction from 21 percent from last year, according to CreditCards.com. That includes four percent of consumers between 18 and 29 and 28 percent of those 65 or older.

Preparing for a possible “rainy day” can prevent financial crises from arising. However, options exist when debts become unmanageable due to circumstances beyond anyone’s control.

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William T. Peckham
1104 Nueces Street, Suite 104
Austin, TX 78701
Phone: 512-487-7604
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