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Emergency Fund vs. Credit Card

Credit Card

During moments in our lives we are faced with bad luck or simply things that go awry and inevitably cost us money. From a car needing repairs to the water heater going out, or an unexpected doctor bill we don’t plan for these to happen, but we can in place in case they do.

As financial planners we generally recommend that our clients have emergency funds in the event that such events are going to happen. On different occasions I will get the argument that an emergency fund isn’t necessary if one has a credit card to simply pay for the unplanned expenses when they happen.

Generally, in an emergency a credit card can come in handy as one may not have quick access to cash, etc. However, the flaw with thinking that a credit card can be used in place of an emergency lies here: How do you pay off the credit card?

The point is that the emergency may go away, but the credit card debt remains and the interest compounds not only the money used but the headache of the emergency the card was used to fund. Several emergencies in a small period of time can lead to high credit card debt – which is an emergency itself; only this emergency is preventable.

One thing folks can consider is to utilize both if necessary. In a pinch a credit card can come in handy if an unexpected emergency happens out of town, or as mentioned previously you don’t have immediate access to your emergency fund. The solution lies in once you have access to your emergency fund use that money to pay off the credit card that you just used for the emergency, and work on replenishing your fund.


  1. Anne says:

    PS hello: I would be interested in learning more about “Fixed Income Investments”; in future newsletters; (bonds; notes; taxes: etc.) thank you !!!

  2. Anne says:

    Thank you! Bank card example: “I can get a “Bank Business Account (checkings) which includes “registration of my business with the Town Hall”; all for a minimum account balance of $750 and a $1 a month account fee; card good @ most banks!
    Have a great summer !!! A.

  3. Anne says:

    I was mentioning yesterday I was saying: “One can get Bank Debit Cards; ATM cards and Bank Credit cards for “free or nominal fees; compared to high credit card

    One does not need an expensive credit card; banks have all types of “Bank Cards”.

    thank you; Anne

    1. sraskie says:

      Thanks, Anne!

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