The $400 test: what the Fed’s 2025 survey says about emergency money
The Federal Reserve’s latest household survey shows 37% of adults still could not cover a $400 emergency with cash. Here is what the numbers say and how to prepare for the next surprise bill.
The short version
At a glance
Key takeaways
- 63% of adults would cover a $400 emergency entirely with cash or its equivalent. That share has not moved in three years and is down from 68% in 2021.12
- 12% of adults said they could not pay a $400 expense by any means.1
- 59% had at least one major unexpected expense in the past year. Car repair or replacement was the most common, at 30% of adults.2
- 55% had emergency savings to cover three months of expenses, down from 59% in 2021.1
Every year the Federal Reserve asks thousands of U.S. adults how they would handle a surprise $400 bill. The answer has become a shorthand for financial resilience. The latest survey, covering 2025 and published in May 2026, shows a country that is holding steady but not getting stronger.1
The $400 question
How adults would pay a $400 bill
People could pick more than one answer, so the bars add up to more than 100%.
If faced with an unexpected $400 expense, adults would…
Share of all U.S. adults, 2025
Cover it with cash or its equivalent63%
Put it on a credit card and pay over time15%
Borrow from a friend or family member10%
Sell something7%
Use a bank loan or line of credit3%
Use a payday loan, deposit advance or overdraft2%
Could not pay by any means12%
The survey also asked a broader question: what is the largest emergency you could pay from savings alone? 18% said less than $100, while 38% said $5,000 or more. 70% could pay at least $500 from savings.1
What actually happened
The surprise bills people really faced
This is not a hypothetical. 59% of adults had at least one major unexpected expense in 2025.2
Most common major unexpected expenses in 2025
Share of all U.S. adults who had each type
Car repair or replacement30%
House or appliance repair22%
Major medical expense21%
Retirement savings often absorb the shock. Among non-retirees who had a major unexpected expense, 7% borrowed from a retirement account and 5% cashed one out, compared with 3% and 2% of those who did not.1
Emergency savings
Who has a three-month cushion
55% of adults had savings to cover three months of expenses. The gap by income is wide.1
Adults with three months of emergency savings, by family income
Share within each income group, 2025
Less than $25,00021%
$25,000 to $49,99939%
$50,000 to $99,99955%
$100,000 or more75%
Hidden risk
Fraud hits the same households hardest
20% of adults reported experiencing financial fraud or a scam in 2025. Among adults earning under $50,000, the median loss was $400, the same size as the emergency in the survey question. Four in 10 people in that group could not cover even a $100 emergency from savings.2
!
A sudden bill makes people easier targets for fake lenders. Any “lender” that guarantees approval or asks for a fee before you get the money is a scam. See the six red flags.
What to do
If you are in the 37%: a plan for the next surprise bill
- 1
Start a small buffer now
Even $100 set aside covers a co-pay, a tow or a utility shortfall. Automate a small transfer on payday so it happens without a decision.
Tip: Keep it in a separate savings account so it is not spent by accident.
- 2
Ask for a payment plan first
Mechanics, utilities and medical offices often split a bill into payments with no interest. Nonprofit hospitals must have a written financial assistance policy.6
- 3
- 4
- 5
Avoid the 391% trap
A typical payday loan charges $15 per $100 for two weeks, which works out to about 391% APR.5 See how the fees add up.
FAQ
Common questions
What does “cash or its equivalent” mean in the Fed survey?
It means paying with cash, money in a checking or savings account, or a credit card that is paid off in full at the next statement.
How many Americans could not pay a $400 bill at all?
12% of adults said they could not pay a $400 expense by any means in 2025, down slightly from 13% in 2024.
What is the most common surprise expense?
Car repair or replacement. 30% of adults had one in 2025, ahead of house or appliance repairs at 22% and major medical bills at 21%.
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Sources
Sources for this page
Official and primary sources only. Last reviewed October 17, 2026.
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1
Federal Reserve BoardSurvey dataEconomic Well-Being of U.S. Households in 2025: Savings and Investments
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2
Federal Reserve BoardSurvey dataEconomic Well-Being of U.S. Households in 2025: Fact Sheet
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3
Federal Reserve BoardOfficial statisticsConsumer Credit G.19
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4
America's Credit UnionsNCUA rulesComparing PALs I and PALs II Loans
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5
Consumer Reports AdvocacyCFPB findingsSummary of CFPB payday loan research
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6
Internal Revenue ServiceFederal rulesFinancial assistance policies (FAPs) for nonprofit hospitals
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7
United Way 211Nonprofit helpline211 helpline: free, confidential referrals 24/7
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8
U.S. Dept. of Health and Human ServicesFederal programLow Income Home Energy Assistance Program (LIHEAP) fact sheet