Among record-high credit card debt and reports of many consumers living paycheck to paycheck, Americans are relying on their savings to cover monthly bills and common everyday expenses, including groceries.
A recentCNBC Selectand Dynata Banking Behaviors Survey found that 40% of respondents who reported having withdrawn cash from their savings say they did so to cover fixed bills, such as a car payment. The second most cited reason, at 38%, was to cover variable expenses like groceries.
While the broader economy has been looking better in recent months — with cooling inflation, a still strong job market and the stock market near all-time highs — consumers are still strained. Many households haven't made it through the inflation fight unscathed, explains Kathryn Anne Edwards, an economist and economic policy consultant.
"Economic indicators say we're doing better [than a year ago], but households don't think of prices in 12-month growth rates," Edwards says. With years of accumulated price increases, it's no surprise that Americans are dipping into their savings to cover everyday expenses.
The top two reasons Americans tapped into their savings were to cover expected monthly costs, including car payments and groceries.
September 2023 CNBC Select x Dynata Banking Behaviors Survey
Compare offers to find the best savings account
22% of Americans tapped into their piggy banks for a large purchase like a house, according to the survey, and the same number reported that they had to use their savings to cover emergencies, like a hospital visit.
While it's smart to avoid debt to cover necessities, especially with record inflation in recent years, making a habit of using savings can run it dry fast.
"If you're dipping into savings to make ends meet, you're ahead of those who are borrowing from creditors or their own retirement funds to get by," says Sarah Newcomb, of THRIVE Financial Empowerment Center and a former behavioral economist for Morningstar. "Still, inflation is a long-term reality, and you should focus on finding ways to cut costs, earn more and possibly restructure debt so that you can get back on track and replenish those emergency funds."
Ways to avoid tapping into your savings
1. Use a checking account for recurring expenses
It's best to keep money for regular expenses like car payments and groceries in a checking account, which allows for unlimited access to your cash. Savings accounts can impose monthly withdrawal limits.
Certain online checking accounts offer a solid return on the money sitting in your account, too, with APYs that are competitive to what high-yield savings accounts offer.
These are some of the top interest-bearing checking accounts on the market right now, which also have welcome offers where you'll earn up to $300 after opening an account and meeting certain requirements:
Axos Bank® Rewards Checking
Learn More
Information about the Axos Bank® Rewards Checking has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.
Annual Percentage Yield (APY)
Build your own APY with up to 3.30% APY*
Minimum deposit to open
No initial deposit to open
Minimum balance
None
Monthly fee
None
Free ATM network
None
ATM fee reimbursem*nt
Unlimited domestic ATM fee reimbursem*nts
Overdraft fee
None
Mobile check deposit
Yes
Terms apply.
SoFi Checking and Savings
SoFi Bank, N.A. is a Member FDIC.
Annual Percentage Yield (APY)
Members with direct deposit earn 4.50% APY on savings, no minimum balance needed. Members without direct deposit earn 1.20%APY on savings balances, and everyone earns 0.50% APY on checking balances.*
Welcome bonus
Earn up to $300 when you sign up and set up direct deposit. Wait for direct deposit to hit account (typically 2-4 weeks). Collect cash bonus of $50 to $300 depending on direct deposit amount.*
Fees
No monthly fee and no excessive transaction fees.*
No-fee overdraft protection
No-fee Overdraft Coverage up to $50 for SoFi members with $1,000 or more in total monthly direct deposits. Purchases exceeding $50 are declined.*
Offer ATM card?
Yes, this account offers a debit card that allows purchases and ATM withdrawals. Terms apply.*
Offer checking account?
Yes, bundled with savings account.
Maximum transactions
Up to 6 free withdrawals or transfers per statement cycle. Transaction amount limits apply.
*Click here for important disclaimers and disclosures.
2. Create a 'budget buffer'
When thinking about budgeting, make sure your checking account has enough in it to cover your monthly needs, plus a small "budget buffer," as Newcomb calls it.
"We typically don't build enough slack into our budgets to cover the ordinary-but-irregular expenses that always come up," Newcomb says, like annual car registration, haircuts or occasional gifts.
You can start by looking at your actual spending from the last three months to get an idea of how much slack you should build into your budget to make ends meet. "In my own household, I've learned to add about 10%," Newcomb says.
The idea is that this budget buffer in your checking account will help with expenses that pop up so you don't need to turn to your savings.
How to maximize your savings
The national average APY on a regular savings account is just 0.46%, while many high-yield savings accounts have interest rates over 5%. Yet, 57% of Americans are using a traditional or regular savings account, according to the CNBC Select Banking Behaviors Survey.
That could mean missing out on hundreds of dollars in interest each year. So, make sure your savings is earning as much as possible with a high-yield savings account. Here are some of the best on the market today:
LendingClub LevelUp Savings Account
LendingClub Bank, N.A., Member FDIC
Annual Percentage Yield (APY)
5.30% (with monthly deposits of at least $250), or 4.80%
Minimum balance
None
Monthly fee
None
Maximum transactions
Excessive transactions fee
None
Overdraft fees
N/A
Offer checking account?
Yes
Offer ATM card?
Yes
Terms apply.
UFB Portfolio Savings
UFB Portfolio Savings is offered by Axos Bank ® , a Member FDIC.
Annual Percentage Yield (APY)
Up to 5.15%APY on any savings balance; add UFB Freedom Checking and meet checking account qualifications to get an additional up to0.20%APY on savings
Minimum balance
$0, no minimum deposit or balance needed for savings
Fees
No monthly maintenance or service fees
Overdraft fee
Overdraft fees may be charged, according to the terms; overdraft protection available
ATM access
Free ATM card with unlimited withdrawals
Maximum transactions
6 per month; terms apply
Terms apply.
Read our UFB Portfolio Savings review.
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Survey methodology
TheCNBC SelectBanking Behaviors Survey of 1,151 Americans across the country was conducted online from Sept. 8, 2023 to Sept. 19, 2023 by Dynata. Survey respondents were nationally representative by gender, age, race and ethnicity using 2020 Census data. Women represented 50% while men represented 49% of respondents and spanned a wide variety of incomes. All those surveyed were 18 or older. The margin of error for the survey was +/-3%.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.