Can Credit Cards Be Used for Emergency Funds?

Credit cards can result in people being in debt because of their large interest if they do not pay their bills on time. However, even so, many claim that credit cards can be useful at times, for example in times of emergency where the owner has no more funds. This is often the question, is it permissible if a credit card is used for emergency funds?
Are Credit Cards Allowed for Emergency Funds?

Before we answer that, it helps us to equate perceptions about emergency funds.

Emergency Fund is a fund that we deliberately save to be used at a critical time, which is related to one's survival. Emergency funds are indispensable because in life a lot of unexpected risks can happen. In the science of financial planning, emergency funds have two main functions:

A reserved fund, such as a reserve fund in case of termination of employment.

Unexpected expenses, medical expenses due to illness or accident.

Usually, people who use credit cards for emergency funds are people who do not have an emergency cash reserve to use when the unexpected happens.



Credit Card Facility

In an emergency, credit cards can be used in 2 different ways:



# 1 Regular Credit Card

This can be done if the emergency can we pay by using a credit card, such as medical expenses in the hospital. If we use it as usual because of the lack of emergency funds, we only need to pay the bill at maturity. If you are late paying the bill, there will be a consequence of late fees, varying the cost per bank of your total credit card bill, with a maximum fine of $150. And if you only pay the minimum, you will be charged interest for the rest of the bill at maturity next month. This is what causes people often get into debt.

# 2 Using ATM

This is usually done if the emergency requires cash, such as the necessities of household life and medical expenses in doctors who do not have credit card machines. This cash withdrawal facility is quite often used a lot of people because more cash can be used anywhere compared to credit cards that can only be used in place of the machine. But it is precisely this that makes more people entangled in credit card debt.

The fees you should know about the credit card withdrawal facility are:

Cash withdrawal fees are fees charged directly at the time the cash withdrawal is made. This fee is usually set at 4% of the total withdrawal or $5 whichever is greater. These fees vary from bank to credit card issuer. The fee is there to pay 'services' the use of money in the ATM machine. Well, the term costs of machine maintenance, security and so forth.

Credit Interest Is Expensive, But Not If Paying The Bills Exactly Number and On Time

From the example above, you can see that the fees and interest charged by credit cards are great if you can not pay your bills on time.

Therefore, you are actually not advisable to withdraw cash or credit card payments, if you can not pay the bill at maturity. But for the emergency, it is possible for you who do not have an emergency fund, to use credit cards first.

All you have to make sure if you have to pay the bills exactly the amount and on time so that you will not be exposed to the above costs.



Credit Card For Emergency Funds

A credit card is only a means of payment. Whether he becomes something good or not depends on the wearer. Many people have different understandings about emergency funds.  there is better you have understanding first. Credit cards may be recommended for emergency funds if the emergency fund is indeed linked to a person's survival, not any other emergency fund, which may be an emergency in the mind of some or even urgent funds but is considered the emergency.