Emergency savings versus credit card debt

Credit card debt that seems safe and manageable can become an untenable burden if you’re experiencing a job loss or family medical emergency. That is one big reason why your credit card debt should never exceed the amount you’ve set aside in your emergency fund.

A new report from Bankrate.com finds that 37 percent of Americans are holding credit card debt that exceeds their emergency savings. The report said Americans between the ages 30 and 49 are in the worst shape. One speculation is that rising child care and housing expenses can cause many people to slip deeper into credit card debt.

The report, however, found that 58 percent of Americans now have more emergency savings than credit card debt. This is up from 51 percent last year, and 55 percent in 2013. Some of the reason for this include an improving economy, which is allowing more people to feel secure in their jobs and to save more. Bankrate said that 24 percent of Americans feel more secure in their jobs than they did a year ago, and that just 16 percent say their overall financial situation is worse than it was last year.

As we transition from a recession economy, there is temptation by Americans to spend more and to 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. And it is the right way to manage our finances.

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