Fewer than four in 10 Americans have an emergency savings account, according to a new poll by Bankrate.com, an online financial news publication. And those who do, the survey found, are “leaving money on the table” by not taking advantage of rising interest rates.
In fact, almost 7 percent earn no interest, and 30 percent are earning less than 3 percent, according to the poll, which was released last week.
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The poll shows that many Americans lack savings to pay their bills during crises such as loss of income due to illness or job loss. And many of those with money in the bank earning less than inflation may actually be losing value in their savings accounts.
Historically, the average annual inflation is about 3 percent, and 37 percent of the poll’s respondents earn 3 percent or less on their emergency funds, Bankrate said, so they’re effectively losing money. By shopping around, they could do better.
“The current national average for a money market account yields a measly 0.79 percent-average, according to Bankrate’s weekly survey of large lenders,” said Daniel P. Ray, editor in chief at Bankrate.com, in a statement.
“But high-yielding [money market accounts] now earn as much as 5 percent,” Ray noted. “The difference is dramatic: Someone with the average size emergency fund — $21,938 — who parks it in the average money market account earns just $173 in a year.”
Ray said the high-yielding fund, in that case, would earn $1,104, a difference of almost $1,000 a year. “Whether there’s an emergency or not, that would make a big difference,” he added.
Bankrate.com also found that savings rates vary by age and income. Of those earning more than $75,000 a year, 63 percent have an emergency fund. At the opposite end, only 20 percent of those earning less than $20,000 a year have one. One in two adults 65 and older have one; one in five people aged 18 to 24 do as well.
The survey also found minor regional differences in saving habits. Northerners are the most likely to save a substantial rainy-day fund, while Southerners the least likely, with Midwesterners and Westerners fall in-between.
The national poll was conducted June 16 to 18 by GfK NOP, using a nationally representative sample of 1,005 adults, aged 18 and older, according to Bankrate.com.
