Friday, 28 February 2014

Are Credit Cards Good In An Emergency?

The simple answer to this question is - they can be. It depends entirely upon the nature of the emergency and whether you will need cash or not. If you are suddenly faced with an unexpected bill for car repairs or you need to buy a last minute gift. Or even if a vital home appliance breaks down and you need another one, using a credit card can be an excellent option which gives you the spending power that you need, instantly.

However, if you need cash, withdrawing it via a credit card can be hugely expensive. If you need cash, it may be better to consider other options like an overdraught or small short term loan, as opposed to taking it out on your card. Some credit cards can charge as much as £5 per day for cash withdrawals – that is a huge amount!

If you have savings, then the best solution is to use them in an emergency, with the strict understanding that you will put the money back in when you have it. Just as you would with an overdraught or credit card, that way, you will avoid interest charges or fees.

Borrowing money is perfectly reasonable and millions of people do it every day. As long as you exercise care and borrow from a source that is reputable and suits your needs at the time, you should have no problems.

However, if you are already struggling with bills or debts, then borrowing even more can make your situation even worse. In these situations, you should think carefully about the type of credit you are using and try to ensure that you use the cheapest form available to you at the time.

Financial emergencies are stressful and can be difficult to navigate. To avoid them, try to keep some emergency money to the side, just in case. In addition, it is worth having a credit card on hand that has available credit, or an unused bank overdraught. This will give you the instant flexibility you need if you suddenly need cash.



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