More than half of the consumers that your collectors are calling everyday are unable to pay a debt that is $400 or more, and if 52% had to pay that much in an emergency all at once, would not be able to pay all of their other bills that month, according to data published earlier this month.
Minorities and younger consumers would also find themselves in tighter financial situations if they had to pay an emergency expense of $400, according to the survey.
Overall, only 48% of consumers would be able to cover a $400 emergency expense with cash or a cash equivalent — such as using a credit card and then paying off the balance in full at the next statement. That figure is up from 47% who would be able to do so in the first quarter of this year. On the bright side, fewer consumers would not be able to pay the debt outright — 17% said so in the second quarter, compared with 19% in the first three months of the year. About the same number of consumers would be able to put the expense on a credit card — but not be able to pay it all off at once, while more consumers would have to use a combination of cash and credit to pay the expense.
When asked about the actual emergency expenses that they faced, consumers most often cited situations like car repairs or medical bills as the most costly, with median totals of more than $300 each. Many consumers, according to the report, reported facing more than one emergency expense each month, with an average value of all emergency expenses totaling nearly $500. The report concludes that this highlights “how cash-strapped many Americans feel amid high prices and economic uncertainty.”
