One in 4 Americans dipped into their savings around the holidays

One in 4 Americans dipped into their savings around the holidays
One-fourth of Americans had to pull from their savings in December, likely to cover holiday costs as they waited for stimulus checks.Noam Galai/Getty Images

It wouldn't be 2020 if the year didn't end on a low note, financially speaking.

A quarter of Americans dipped into their savings accounts in December, according to MagnifyMoney's latest Savings Index, which surveyed 1,000 Americans. That's compared to 19% last December. It's a new high in MagnifyMoney's 15-month history of its savings index.

Meanwhile, the percentage of Americans growing their savings decreased. Only 33% of Americans tucked away money in December, whereas 42% did last year, the survey found.
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It's reflective of America's "K-shaped recovery," in which those at the top have been able to save more money during the pandemic, creating increasingly larger cushions, as those at the bottom of the K have been falling into poverty.

Stimulus chaos created a grinchy Christmas

MagnifyMoney's findings follow America's miserable Christmas.

After months of legislative gridlock, Congress finally struck a deal on a new $900 billion coronavirus stimulus package on December 20. The package promises $600 in stimulus checks and an extra $300 week in unemployment benefits.
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But by then, it was too little, too late. Stimulus payments didn't start hitting Americans' bank accounts until the week after Christmas, with direct deposits beginning December 29 and paper payments following the next day. The post-holiday rollout likely left some Americans scrambling to pay for Christmas costs.

The average American planned to spend about $998 on gifts and other holiday expenses in 2020, per the National Retail Federation's October estimates. That's $50 less than what they spent last year, a dip likely due to the pandemic, but still 20% more than what Americans were spending a decade ago. With most Americans expecting to get their stimulus check by January 15 - and some not until they file their 2020 tax returns - it's no wonder 25% had to close out 2020 by turning to their savings as a last resort.
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