When credit card debt outpaces savings

A recent study indicates that many Americans may be in a potentially precarious situation when it comes to their credit card debt as compared to their savings. 

In the study, released by Bankrate.com, a survey was conducted in which individuals were asked questions about credit card debt and emergency savings. 

Around 37 percent of the respondents said that the amount of credit card debt they had was at the same level as or exceeded the amount of emergency savings they had. One age group in particular showed a particularly high likelihood of being in this situation. This age group is the 30 to 49 age group. Within this age group, the percentage of respondents who reported that their credit card debt levels were equal to or in excess of their emergency savings was 46 percent.

Why do you think so many Americans (particularly those in the 30 to 49 age group) do not have more emergency savings than they do credit card debt? How big of an importance do you think people generally place on emergency savings? Do you think people generally should be putting a greater focus on building up emergency savings? What do you think are the best ways to help keep credit card debt levels in check? 

When a person does not have a higher level of emergency savings than they do credit card debt, they can be particularly vulnerable to financial shocks. An unexpected major expenditure can sometimes cause a person in such a situation to quickly go from having things financially under control to being overwhelmed by debt. 

Thus, many Americans might be one unlucky financial event away from facing serious debt problems. When a person has lost control of their debt situation due to an unexpected expenditure, they may want to speak with a lawyer about whether bankruptcy could help them get back in control of their finances.

Source: U.S. News & World Report, “1 in 3 Americans Near Financial Disaster,” Andrew Soergel, Feb. 23, 2015