As inflation cools, its impact could be felt for years to come
More than a third of Americans have more debt than emergency savings
(InvestigateTV) — More than two-thirds of Americans say they’re saving less for emergencies because of inflation, according to a recent Bankrate survey.
“At Bankrate we’re kind of thinking about inflation as leaving scars on Americans’ finances, sort of similar to how Americans really took years to recover from the Great Recession of 2007 to 2009,” Sarah Foster, an analyst with Bankrate, said.
Foster said Americans aren’t just saving less right now, they’re also adding to their credit card debt. More than a third of Americans have more credit card debt than emergency savings, the highest on record since 2011.
“If you were to accrue just the average credit card balance of $5,900, if you were only able to afford the minimum payment, it would take you 25 years and almost $3,300 in interest to pay it off,” Foster said. “So, this kind of debt is something that just kind of hovers over you. It lingers for years to come in disastrous ways.”
Foster shared several tips to help pay down debt and build up savings:
- Take advantage of tools that help eliminate debt, like credit card balance transfers or cards with a 0% interest offer. It may help chip away at the debt faster.
- Calculate the fees that come with a transfer to make sure it’s worth it.
- Once inflation cools, aggressively go after credit card debt and then build retirement accounts.
Lastly, Foster noted inflation rates are different depending on what items are purchased, so know where the rates are highest and adjust spending.
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