This is the No. 1 reason Americans are withdrawing from their savings (2024)

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A recentCNBC Selectand Dynata Banking Behaviors Survey found that 40% of respondents who reported having withdrawn cash from their savings say they did so to cover fixed bills, such as a car payment.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.

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."

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:

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.

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:

Subscribe to the CNBC Select Newsletter!

Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox.Sign up here.

AtCNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every banking article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products.While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

Catch up on CNBC Select's in-depth coverage ofcredit cards,bankingandmoney, and follow us onTikTok,Facebook,InstagramandTwitterto stay up to date.

Read more