You never know when you’ll come face-to-face with an emergency. Should that happen, it has the potential to turn your finances upside down. Fortunately, if you prepare in advance, you’re in better position to deal with anything that comes your way.
And that’s why you should consider carrying an emergency credit card.
As the name suggests, this is a credit card that you keep nearby for emergencies only. You don’t pull it out to buy your morning coffee or upgrade to the latest big screen television. Instead, you keep it tucked away for only the most serious of financial circumstances.
Do You Really Need it?
There’s no right or wrong answer to this question, as it depends largely on your personal finances and ability to deal with unforeseen financial concerns.
For example, if you have a large emergency savings account, you may not see the purpose of carrying another credit card.
Conversely, if your savings account is low and you’re always tight on money, an emergency credit card may give you the peace of mind you deserve.
Features of the Best Emergency Credit Cards
Should you decide to in favor of an emergency credit card, you still have an important question to answer: which one is the right choice?
Again, this varies from person to person, but there are some key features to keep in mind during your search:
- Credit limit: You don’t want an emergency credit card with a low credit limit, as it may not be able to handle any situation that could arise. Shoot for a higher credit limit, with $2,500 to $5,000 a good minimum.
- Competitive interest rate: If you face an emergency, there’s a good chance you’ll end up carrying a balance on your credit card. And when that happens, you’ll get hit with a finance charge. The lower your interest rate, the less money you pay every time you carry a balance to the next statement period.
- No annual fee: You have no intention of using your credit card often, so it doesn’t make sense to choose one with an annual fee. There are plenty of feature-packed credit cards with no annual fee, so start your search with these offers.
What is an Emergency?
Only you can answer this question. What you consider an emergency another person may consider a minor inconvenience.
For example, if your car breaks down and you need to repair it so you can commute to and from work, most people would consider that an emergency. But of course, some may be able to pay for it without pulling out their plastic.
Tip: don’t use your emergency credit card until you first consider all other options, such as cash and money in your savings account.
Some people carry an emergency credit card, others don’t see the point, and just as many are on the fence as to whether or not to apply for one.
If you like the idea of having a card for emergencies only, it doesn’t hurt to apply for one and keep it handy for future use. As the saying goes, it’s better to be safe than sorry!