Credit card debt that seems safe and manageable can become an untenable burden once we’re hit with a job loss or family medical emergency. That’s why – at the least — your credit card debt should never exceed the amount you’ve set aside to deal with emergencies.
Yet, a new report from Bankrate finds that 37% of Americans are holding credit card debt that exceeds their emergency savings. They are courting disaster.
Greg McBride, Bankrate.com’s chief financial analyst, said that Americans between the ages 30 and 49 are in the worst shape. He speculates that mounting child care and housing expenses cause many of them to slip into deeper and deeper credit card debt. He’s probably right about that.
But this is not a “bad news” story; in fact, things are getting better.
Bankrate found that 58% of Americans now have more emergency savings than credit card debt. This is up from 51% last year, and 55% in 2013.
An improving economy has allowed more Americans to feel secure in their jobs, and to save more. Bankrate said that 24% of Americans feel more secure in their jobs than they did a year ago, and that just 16% say their overall financial situation is worse than it was last year.
As we move out from under a recession economy, many Americans may be tempted to spend more – and put more of that spending on their credit cards. But years of hard times have made a real impression on many of us.
Instead of spending, we are saving. This may not be as fun, but it’s the right way to manage our finances.