Should You Have an Emergency Credit Card?

If used responsibly, an emergency credit card could be a good idea to have on hand.

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Updated May 13, 2024
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No doubt you already know it’s important to be financially prepared for emergencies — maybe you have some money set aside for this very purpose.

However, there may be some cases when you need to rely on other sources of funding, such as an emergency card. Here’s how to handle those situations when they arise.

Do I need an emergency credit card?

Using a credit card for emergencies carries risk and, in most cases, shouldn’t be your first choice when paying for crises. If you rack up a large credit card bill, you could find it hard to pay off the entire balance at once and be hit with high interest rates. Worse yet, your credit could be negatively affected if you fail to make on-time payments.

However, sometimes life throws you a curveball and using an emergency credit card can help you get out of a jam.

Holding a credit card you reserve specifically for emergencies can give you some peace of mind. Perhaps you already have savings set aside, but you don’t feel it’s large enough — you’ll only use the card if you drain your savings account. For example, if you need emergency dental surgery, you could use a credit card to pay for what your savings can’t cover.

But before you get an emergency card, make sure you won’t be tempted to use it for non-emergencies — or rack up debt you can’t afford to repay. This card is meant to only be used for unavoidable expenses, so ensure that you and anyone with access to the card understand that.

What should I look for in an emergency credit card?

Not all credit cards are created equal, and some make more sense for emergencies than others. Consider cards that have the following attributes:

  • High credit limit: Opening a credit card with a high credit limit ensures you’ll have more of a financial cushion and can use it for larger purchases, such as a car repair bill.
  • Low APR: If you must carry a balance on your card, ensure you’re not tasked with paying an exorbitant interest rate. If you’re lucky, you may be able to take advantage of a card that offers a 0% introductory APR. That could allow you to pay off your emergency costs over time without interest. Even if an emergency doesn’t fall within a card’s intro APR, you could potentially transfer your balance from an old credit card to a new card that offers no or low APR. There are usually fees for balance transfers, so make sure you understand the costs before doing so.
  • No annual fee: There’s really no point in paying an annual fee for a credit card you don’t intend on using often. Instead, consider a card with no annual fee.
  • Widely accepted: Using a card that’s accepted by most retailers could help you when you’re in a pinch. Generally, Visa, Mastercard, and Discover are more widely accepted than American Express.
  • Additional insurances and protections: Though not a dealbreaker, check to see what types of perks you may get, such as purchase protection and insurance. For example, if your cell phone is stolen, some credit cards provide insurance that could reimburse you for the loss.

What to do if you have to use your emergency credit card

Once you open an emergency credit card, here are some best practices for using it:

Make sure it’s really an emergency: Using a credit card to make purchases is tempting, but this credit card is specifically for emergencies. Pull it out for unavoidable bills you can’t pay for with your savings — such as if your car breaks down, or you take an unexpected trip to the emergency room.

To avoid temptation, consider taking it out of your wallet and keeping it with your other important financial documents. Then you can take it out only when you really need it.

Consider all other alternatives: Because of the high interest rates, using a credit card should be one of your last resorts when an emergency arises. Consider other alternatives, such as pulling out cash from your savings account, asking family or friends for a short-term loan, or some other form of loan with a lower APR than your credit card.

Figure out how long it will take you to pay off your balance: If you do end up using a credit card to fund your emergency, find out how long it will take for you to realistically pay it off. Most credit card statements will show you how long it will take to pay off your entire balance if you only make the minimum payments, so that’s a good place to start.

Create a strategy to pay it off ASAP: Once you’ve used your card, take a hard look at your financial situation and make a plan to pay it off quickly. To save money on interest, make more than the minimum payments if you can afford it. Consider also cutting back on discretionary expenses, working one of the best side hustles, or asking for extra shifts at your job until your bill is paid off. Prioritizing ways to make money and saving money can go a long way in paying off that balance quickly.

Use your emergency card carefully

If you decide to open a new credit card, consider using it to make occasional small purchases. Card issuers may close your card due to inactivity, so using it for a small purchase every few months should prevent that from happening.

And just because you don’t use your card often doesn’t mean you should forget about it entirely. Check in from time to time to monitor your account for any suspicious activity.

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Sarah Li Cain

Sarah Li Cain is an experienced content marketing writer specializing in FinTech, credit, loans, personal finance, alternative investments, real estate, banking, international business and travel. Her work has appeared in Fortune 500 companies, publications and startups such as Transferwise, Wordpress, Pearson Teachability and KeyBank.