By William Wille, managing editor, The Credit Union Connection
Tightrope walkers. We’ve all seen them. At circuses, street festivals, even in extreme locations such as gorges and natural landmarks. We’ve sat on the edge of our seats waiting for them to make it to the other side, usually with a safety net below.
However, for 2 in 3 Americans, the affordability crisis has affected emergency savings, forcing them to walk a tightrope between financial safety and making ends meet, according to a survey released this week by WalletHub. In fact, it has cannibalized their emergency funds.
Speaking of a savings crisis, credit unions could also start feeling the pinch. Share certificates are weakening, with money market accounts and share drafts capturing the bulk of new deposits, signaling that members are prioritizing immediate liquidity and keeping cash accessible as they navigate financial uncertainty.
The sobering anatomy of the safety net
The affordability crisis is a direct hit to the American piggy bank. Perhaps the most troubling metric in the report is the $1,000 gap, a direct measure of how deeply it has hit American households. Nearly 1 in 5 Americans admitted they couldn’t come up with $1,000 in cash within 24 hours, even if a loved one’s life depended on it.
CU Strategic Planning, the leading consultancy for mission-driven credit unions, are showing what’s possible when the small-dollar loan becomes a tool for long-term financial stability.
“One of the more effective approaches we’re seeing and helping CDFI credit unions develop is the use of ‘borrow-and-save’ loans. These are small-dollar loans designed for immediate needs with a built-in savings component, so a portion of the funds is set aside while the borrower makes payments. The payments are reported to the credit bureaus, helping build credit, and when the loan is paid off, the member has a savings cushion in place. It’s a practical way to meet an urgent need while also helping members build the kind of financial resilience that can prevent the next emergency,” Aaron Duffy, CU Strategic Planning SVP of Community Advancement, said.
Legitimate obstacles vs. excuses
It’s easy to play the stop-buying-lattes card or point to poor budgeting as the culprit. But unless those lattes are being delivered by a private jet, the math doesn’t add up. Survey participants were candid about the structural walls they’ve hit. Sixty-four percent of Americans don’t feel they earn enough to properly save. More than one-third (36%) point the finger directly at inflation.
As WalletHub Editor John Kiernan puts it, these are legitimate obstacles. When the cost of daily essentials such as groceries doubles, the emergency fund is usually the first bucket to go dry.
The low-yield trap
While the lack of cash is the primary problem, the cash they save is earning squat. The survey uncovered a glaring low-yield trap. Nearly 2 in 5 people earn less than 3% APY on their emergency funds.
Members in financial stress are deliberately staying liquid. Uncertainty makes them reluctant to lock money away, even for a higher yield.
What they need is competitive returns on accounts they can actually access and options that don’t require a $10,000 minimum or a multi-year commitment.
Credit unions are uniquely positioned to meet members where they are. By offering flexible, accessible savings options that still provide a fair return, they can reinforce trust without asking members to take on more risk than they can handle.
If members feel they must choose between safety and growth, they may look elsewhere for a better balance, even a fintech app that promises higher yield and a better user experience. Credit unions can be stable, supportive and shiny and new like a fintech.
Teacher-at-heart strategy in action at OneAZ
If the survey data show a widening gap in the safety net, the industry’s response must move beyond simply offering more products, as Sarah Snell Cooke noted in a recent podcast from The Credit Union Connection with Chip Griffith, chief member experience officer at OneAZ Credit Union.
Griffith argues that credit unions are standing at a crossroads. With only 41% of Americans using a financial advisor, and that number plummeting for younger adults, credit unions must fill the void left by schools and social media “fin-fluencers.” For Gen Z and Gen Alpha, falling into a credit union is becoming less likely as neobanks, fintechs and others become increasingly attractive financial services options.
Credit unions can no longer be the best-kept secret.
OneAZ is tackling this by treating financial coaching as a core responsibility rather than a marketing nice-to-have. They aren’t just telling members to save. They are certifying every MSR as a financial coach. This shift changes the conversation from “Do you want to open a savings account?” to “Let’s sit down and look at your budget together.”
The average credit union member is 53 years old, and less than 20% of Americans under 40 belong to a credit union. Meanwhile, according to research recently released by Filene, 42% of Gen Z is turning to social media for financial guidance rather than traditional financial advisors (27%). And even more striking is that 90% of Gen Z have received financial advice on TikTok without even looking for it.
When these digital fin-fluencers fail to provide a real-life safety net, these young consumers fall back on the only other source of funds they know.
The credit union of mom and dad
Perhaps most concerning for the long-term health of the financial cooperative industry is the finding that more than 1 in 4 people expect a parent, friend or government program to bail them out of a jam.
This reflects a fundamental breakdown. Many members are walking the tightrope, assuming there is a safety net of friends, family or government programs waiting below. At times of crisis, that social net is often more like a spiderweb. It looks structural until you fall into it.
If young members can’t save, they’ll turn to small-dollar lenders who bury them in fees or the compounding interest of rollovers. In a recent article, James Chemplavil, founder/CEO of Salus, shared that after six months with a fintech lender, a small-dollar borrower pays “a total of $505 in fees and expenses to access these advances, which is 65% of the $780 they still owe. Alternative finance provider fees were a larger part of the member’s ‘debt’ than whatever caused them to borrow six months earlier.”
However, a 12-month, $800 loan at an 18% interest rate from a credit union would give the member 12 monthly payments of just $73.40, and it would save them $425, or 84% (!) in fees and interest.
“Credit unions can measure that impact in dollars, but what isn’t measured is how a member’s burden is eased and how that member feels about the credit union helping them in a time of need,” James wrote. (Read his full article here!)
Why can’t members save?
If 59% of people say they try to include emergency savings in their monthly budget, why is the net still shrinking? Credit unions have a unique opportunity here to transition from transactional providers to relational financial coaches.
A harder question is why so many members don’t think of their credit union first. For some, it might be awareness. For others, it could be a product gap. And yet for many others, it may be the shame of walking into a branch and admitting their tightrope is fraying.
Credit unions that remove those barriers can position themselves as the trusted financial institution members call before they bug mom and dad.
Credit union strategy lives in the gap between member intention and action
The $1,000 crisis is a wake-up call for 2026. An emergency fund is a necessity.
The tightrope is real. Credit unions are the ones holding the net.