Is a credit card necessary for emergency purposes?
There are plenty of people who think it is. Is that because the credit card companies have conditioned us to believe this to be true? Have our parents always said that we need one “just for emergencies”? Is that what our broke friends and family memebers have said for years?
Yes to all of the above. But I just don’t buy it!!
Types of Emergencies:
Emergency: Look back at the last year and see what emergencies you’ve had. Are any of these emergencies that could have been paid for in cash? Probably. Are any of these emergencies that could have been billed at a later date or put on a payment plan if they were super large? Probably.
Car Repairs is one category that has hit me personally. There are few common car repairs that will cost more than $2,000. A well-built and maintained emergency fund can handle these repairs. If the repairs are more than the EM fund, you can move money around to get the cash you need.
Hospital Bills Ever hear about people going bankrupt from hospital bills? Yes, hospitals are the masters at billing you. But sometimes, depending on the amounts owed, you can work with the hospital to develop a payment plan so you won’t have to pay your bill in one lump sum. Besides, if you paid a mega hospital bill with a credit card, good luck paying off the interest on a few thousand dollars.
New Cloths This is NOT an emergency. Yes you have that wedding to attend this weekend, but it is NOT an emergency.
Clogged drain Mr. Rooter Plumber is fairly cheap and your emergency fund will cover it. Again Mr. Rooter Plumber is usually a small business and they will setup payment plans if needed.
Rental Cars I just went through this a couple of months ago. You’re ID and copies resent pay stubs and utility bills can getyou into a rental car most of the time. I paid with my debit card and never looked back.
I’m sure there is something I’m missing, but I’m sure you get the point. “Emergency” credit cards are a sham. I have plenty of friends and family who don’t own credit cards and are perfectly safe from financial emergencies. If you decide to get a credit card, make sure you don’t like to yourself about its usage.
What’s your take? Emergency Credit Card or Emergency Fund??