Only 4-in-10 Could Pay an Unexpected $1,000 Car Repair or Emergency Room Visit from Their Savings

The average unexpected expense costs $3,518

News Release, Bankrate.com

NEW YORK – January 22, 2020 – Only 41% of U.S. adults have enough savings to cover a $1,000 emergency room visit or car repair, according to a new report by Bankrate.com. Another 37% would need to borrow the money in some fashion: 16% would finance it with a credit card and pay it off over time; 14% would hit up family or friends for a loan, and 7% would take out a personal loan.

“Using a credit card was the most common way for those without savings to pay for emergency expenses,” says Bankrate.com chief financial analyst, Greg McBride, CFA. “But this comes at a high cost, as the average $3,500 expense financed at the national average credit card rate of 17% would require monthly payments of $125, taking three years to pay off and incurring nearly $1,000 in finance charges. Whatever savings you can accumulate acts as a buffer from high-cost debt when unplanned expenses arise.”

How common are unplanned expenses?

In the past 12 months, 28% of U.S. adults have had a major unexpected expense themselves or in their immediate family. The median amount of this expense is $1,750. The average amount is $3,518.

“Prepare yourself for the inevitable, unplanned expense by setting up a direct deposit from your paycheck into a dedicated emergency savings account,” adds McBride. “Even $20 per week will add up, getting you to the $1,000 mark by year-end.”

Higher-income households are more likely to pay unplanned costs from savings. Fifty-six percent of those with an income of $50,000 or more would pay from savings compared to 28% of those with income under $50,000.

The lowest-income households (under $30,000/year) were more likely than those with higher incomes to borrow from family or friends (25% versus 8% for all other income groups) or to take a personal loan (13% versus 5% for all other income groups).

Just 36% of younger millennials (ages 23-29) could pay a $1,000 unplanned expense from savings, compared to 41% – 44% for all older age brackets.

Those that are married or living with a partner are more likely to be able to pay the $1,000 from savings (48%) compared to just 30% of those that are not. Similarly, 50% of those that are employed full-time could pay from savings, compared to 32% working part-time and 34% that are not employed.

Parents had a higher likelihood of paying from savings (47%) than non-parents (40%), but fewer than half in either case.

Methodology: This study was conducted for Bankrate via telephone by SSRS on its Omnibus survey platform. The SSRS Omnibus is a national, weekly, dual-frame bilingual telephone survey. Interviews were conducted from December 30, 2019, to January 05, 2020, among a sample of 1,015 respondents in English (980) and Spanish (35). Telephone interviews were conducted by landline (307) and cell phone (708, including 470 without a landline phone). The margin of error for total respondents is +/-3.39% at the 95% confidence level. All SSRS Omnibus data are weighted to represent the target population.


The Southern Maryland Chronicle is a local, small business entrusted to provide factual, unbiased reporting to the Southern Maryland Community. While we look to local businesses for advertising, we hope to keep that cost as low as possible in order to attract even the smallest of local businesses and help them get out to the public. We must also be able to pay employees(part-time and full-time), along with equipment, and website related things. We never want to make the Chronicle a “pay-wall” style news site.

To that end, we are looking to the community to offer donations. Whether it’s a one-time donation or you set up a reoccurring monthly donation. It is all appreciated. All donations at this time will be going to furthering the Chronicle through hiring individuals that have the same goals of providing fair, and unbiased news to the community. For now, donations will be going to a business PayPal account I have set-up for the Southern Maryland Chronicle, KDC Designs. All business transactions currently occur within this PayPal account. If you have any questions regarding this you can email me at [email protected]

Thank you for all of your support and I hope to continue bringing Southern Maryland the best news possible for a very long time. — David M. Higgins II




© 2019 The Southern Maryland Chronicle. All Rights Reserved. This website is not intended for users located within the European Economic Area.

 

 

David M. Higgins II

David M. Higgins was born in Baltimore and grew up in Southern Maryland. He has had a passion for journalism since high school. After spending many years in the Hospitality Industry he began working in Digital Marketing, eventually leading him back to his passion. David started The Southern Maryland Chronicle in December 2017 and has grown it to become the #1 news source in Southern Maryland.

David M. Higgins II has 10045 posts and counting. See all posts by David M. Higgins II