3 times more money to use a credit card in an emergency

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Credit cards can make shopping easier. You don’t have to worry about having enough cash on you to cover your purchases, and you can earn reward points for things you already buy. Credit cards can also come in handy when an unforeseen expense arises. Here are three situations where it pays to use a credit card to cover an emergency.

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1. You don’t have emergency funds

As a general rule, it’s a good idea to have enough money in an emergency fund to cover three to six months of essential living expenses. That way, if an unexpected bill hits you, like a car or home repair, or if you are unemployed for a period of time, you will have money to fall back on and not immediately have to get into debt. .

In a financial emergency, the best thing to do is to dip into your savings. But if you don’t have emergency funds, that’s not an option. And in that case, it might be worth charging your unexpected bill to a credit card.

2. Your credit score just took a hit

There are several reasons why your credit score may have fallen recently. For example, if you are 90 days or more late on a single invoice, your score could drop.

Now, normally, if you run into an unexpected expense and don’t have the money in savings to cover it, applying for a personal loan can be a good back-up plan because usually you will pay less interest on a loan. personal than what a personal credit card loan will charge you. But if your credit score has taken a recent hit, you might not qualify for a good rate on a personal loan. Or, you might not be eligible for a loan at all. And in this case, going back to a credit card makes sense.

3. You have a 0% introductory APR card

The problem with billing emergency expenses to a credit card is that you’ll often be forced to pay a lot of interest in the process. But let’s say you get a 0% APR credit card (a card where you don’t have to pay interest for a set period of time, often several months or even more than a year). Using this card to cover your unexpected bill could be a smart move, that is, if you are confident that you will be able to pay off your balance quickly.

Paying off your balance before the end of your 0% introductory period will avoid costly interest on the invoice in question. But if you fail to do so, you could be hit with a very high interest rate.

Surprise expenses can increase at any time and they can take a toll on your finances. While using your savings to cover them is usually the most ideal solution, if that is not an option and you are not in an ideal position to apply for a loan, then it makes sense to look to your credit cards. Just do your best to pay off that debt as quickly as possible so that it costs you as little as possible.


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