Emergency Credit Cards

by Ryan Yates

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??


Matt Jabs December 25, 2009 at

Ha ha… beautifully put Jeff.

Over the past year I have been working to teach my friends and family about the severe brainwashing we, as consumers, have received from society and from the banks.

We CAN save money and pay for emergencies with cash! My wife and I are doing just that and have never felt better about our financial security blanket. 🙂

Cheers man.
.-= Matt Jabs´s last blog ..Dealing with Holiday Debt and a $100 Giveaway =-.

Jeffrey Kosola December 27, 2009 at

Yeah, I strongly agree with the brain washing. Everywhere I look someone is doing it. I’m just glad there are others out there that believe what we do.

Just pay cash. It’s so easy to do, even your Grandma can do it 🙂

Money Funk December 25, 2009 at

Is this a ploy to get me to Fund the Bank of Christine? LOL.

I think that most of the emergencies we had this past year were paid with our EF. Yeah! Unfortunately, we haven’t replenished it. 🙁

And I have to agree that it would be nice to have a well funded EF account over a CC with high interest rates! Makes for a great 2010 goal – get EF back up to par!

Jeffrey Kosola December 27, 2009 at

Yes Christine this was a ploy just for you. I’m glad you funded the emergencies from your EF this year. See, now that wasn’t that hard. NOW, finish re-funding your Emergency Fund BEFORE!!!!! you continue paying down the debt. Otherwise Mr. Murphy will attack you and get you to pull out that stupid “emergency” credit card.

Remember, there are a lot of people out here now who have a vested stake in your debt freedom.

Your Debt Buddy, Jeff

Walter December 25, 2009 at

Credit card companies sure knows how to maximize their profits. It is wise to have our own emergency fund than to rely on credit cards, lest we want to waste our money on high interest. 🙂

Jeffrey Kosola December 27, 2009 at

That’s right Walter, I hate to give the “big” guys any more than I have too.

Thank-you for your comment, Jeff

Money Funk December 27, 2009 at

Yes, that is true… and I thank you investors. But you never need to worry about an ‘issue’ arising in matters of the LC. 🙂 And it is on my foremost of goals to re- fund our EF.

Did I tell you it was quite fun to PIF all those Credit Cards into one payment via personal loan? And with the strategic ways I did it (what cards were paid off)…. I turned a $441 in payment(s) to a $240 payment per month. Thus saving us overall $1000 of interest, 1 year in payments, and an extra $200 a month to put into our EF. 😉 Tis we did well.
.-= Money Funk´s last blog ..Merry Christmas! =-.

Jeffrey Kosola December 27, 2009 at

I’m so glad you had fun paying off those cards. You made a good move by using LC to help your cause.

$200 a month is Huge and you’ll have the EF funded in no time, then back to the snowball 🙂

Brad Chaffee December 29, 2009 at

Great post Jeff! You know my take on this but for those that don’t—credit cards are not supposed to be used as emergency funds. Matt is right. we have been brainwashed as a society by banks and credit card companies but cash is the best option when covering emergencies. IT MAKES ABSOLUTELY NO SENSE to consider debt as a way to pay for an emergency!! None at all!

Thanks for writing this post Jeff!
.-= Brad Chaffee´s last blog ..Pay Off Debt In 2010 By Increasing Your Debt Snowball =-.

Kimberly December 30, 2009 at

I have a fully funded emergency fund+, and no debt, but I am in favor of keeping a credit card for emergencies. Do I need it? Well, I don’t know and can’t know until an emergency comes up, but I am in favor of being fully prepared and for me I prefer the idea that if something comes up I at least have that option. I think that as long as it’s not your first choice for payment it can be a tool that you keep right along with an emergency fund.

Jeffrey Kosola December 30, 2009 at

Good for you Kimberly,

I’ll be behind you shortly (fully funded EF and No Debt). There will always be people on both sides of the fence over credit cards. I understand the point of having multiple tools for you to use. For me, I just don’t want to go back – EVER.

A fully funded EF for me would be a large chunk of change. If I choose to keep one credit card with a limit of $10,000 my EF would still have more “Emergency” buying power than that piece of plastic.

Thanks Kimberly, Jeff

Craig December 30, 2009 at

Having an emergency fund is great but still may need to pay with the credit card and then just transfer the money over from your EF account. Sometimes emergencies are too much where it would be difficult to have that much cash.

Jeffrey Kosola December 30, 2009 at

Thanks Craig,

My Grandma never used a credit card and she was able to pay cash for any emergencies she encountered.

I understand the your point on credit card. It’s much easier to charge it and then transfer the money. But for many people that just leads to having a balance on a credit card again because they don’t want to touch the EF fund.

There are so many ways to handle these issues, it is a completely personal choice on how someone does. I guess that’s what make Personal Finance “Personal”

Thanks for the comment Craig (@budgetpulse), see ya around TwitterWorld

youngandthrifty December 31, 2009 at

I would say emergency fund! I love my credit card though, I get perks with it (got to stay in the Princess Sheraton in Oahu for $50 a night) but I make sure to pay it off.

haha, I agree, clothes are definitely not an “emergency”, though I think if you proposed that to the people from Sex and the City that would be debatable to them.
.-= youngandthrifty´s last blog ..The Boxing Day Hangover =-.

Jeffrey Kosola December 31, 2009 at

Ha Ha Sex and the City girls would think 10 cosmos are worth dipping into an Emergency Fund.

I hope you didn’t go all the way to Oahu for a $50 a night room 🙂

Thanks for the EF vote, keep up the great work… Jeff

youngandthrifty January 3, 2010 at

Hahah 10 cosmos. Yes, or the manolo bhaniks and jimmy choo shoes would warrant breaking into the emergency credit card. They would put a big dent in the card.
No, I didn’t go to Oahu for a $50 a night room, that would defeat the purpose of trying to save money. =)
.-= youngandthrifty´s last blog ..2010 New Year Financial Resolutions =-.

Jeffrey Kosola January 4, 2010 at

Too bad I’m a guy, but I do know what Jimmy Choos are.

Check out my Blog/Twitter Role, I just added you 🙂

Indian Thoughts January 4, 2010 at

I am more of a Emergency Fund person. I am not sure I’ll ever opt for emergency credit cards. But I still think its more of personal choice and comfort level.
.-= Indian Thoughts´s last blog ..How I Spend first day of 2010 =-.

Jeffrey Kosola January 4, 2010 at

@Indian Thoughts

Thanks for weighing on this one. It’s a very personal choice, and it’s great to see the varied stances people have.

youngandthrifty January 4, 2010 at

Hey Jeff, thanks for putting me on a blog roll! (my first one! haha I am blog roll devirginized now).

I’m in the process of putting a blog roll up too! (it will be soon… just need to get off my a__ to do it!)

PS that is pretty good that you know what jimmy choo’s are! (most guys don’t- my guy doesn’t know likely) your wife must be proud! =P
.-= youngandthrifty´s last blog ..2010 Financial Resolutions from PF bloggers =-.

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