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Credit card balances have dropped during the Covid-19 pandemic. Now financial experts are hoping Americans can find the wiggle room to reach another financial goal: bulking up their emergency savings.
Total credit card debt in the U.S. dropped by 13% by the end of the third quarter of 2020, according to the Federal Reserve, bringing outstanding balances down to $807 billion from almost $930 billion.
Still, many people have not accumulated a stash of cash to cover them in emergencies. In fact, only 39% of people can pay for an unexpected $1,000 expense through savings, a Bankrate.com survey found.
The ideal number to shoot for when it comes to emergency savings is at least three to six months’ worth of living expenses, according to certified financial planner Ted Jenkin, CEO at Atlanta-based Oxygen Financial. If you’re more financially conservative, you may want to put a year’s worth away.
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