Comments on: Should a Credit Card Act as Your Emergency Fund?

By: Walter Edelstein

Walter Edelstein — Mon, 15 Mar 2010 16:36:10 +0000

It is very rarely a good idea to use your credit card as an emergency fund. If you have other resources available to you like a home equity loan — it would be better to use that for emergencies.

By: DR

DR — Sat, 20 Feb 2010 10:55:45 +0000

ablenko, most credit cards today are free in that they don't charge an annual fee. Of course, if you carry a balance from month to month, you'll pay interest charges. You can check out a lot of the popular cards on our credit card page.

By: ablenko

ablenko — Fri, 19 Feb 2010 09:43:04 +0000

how can i get free credit card easily

By: DR

DR — Tue, 16 Feb 2010 03:14:52 +0000

Cash does make a good emergency fund, but does it make sense to save cash if you already have credit card debt? Rather than sticking that cash in the bank to earn little interest, why not put it towards the credit card debt?

By: FinancialBondage

FinancialBondage — Tue, 16 Feb 2010 00:59:23 +0000

Bad idea. Cash makes a good emergency fund. (I say this as I look at the BIG citi add on the bottom of the page).

By: Shawanda @ You Have More Than You Think

Shawanda @ You Have More Than You Think — Sat, 13 Feb 2010 11:51:00 +0000

I wouldn’t advocate using a credit card as an emergency fund. Surely this could work for someone who’s willing to take on more risk, but I’d feel extremely uncomfortable putting my emergency stash in a riskier investment than a high-yield savings account. I need to know that if I’ve set aside $20K in rainy day money, no less than $20K will be there when I need it. During a stock market downturn, you might be forced to lock in losses if you’re unable to replenish the funds quickly. In my opinion, the risk just isn’t worth it.

Additionally, cash has other benefits. What if a large asset or investment comes available at a bargain price when your portfolio value is down Cashing out a losing investment to pick up one at a discount, may not turn out to be much of a bargain at all. However, I’m not sure if you’re promoting zero cash reserves.

By: Ginger

Ginger — Fri, 12 Feb 2010 17:21:30 +0000

It seems to me that once a person has multiple income streams and a large amount of investments outside of their retirement they do not need as large of an emergency fund as most people. However for most people they do not have the will power, the multiple income streams and the investments to be able to have a small emergency fund. For example, I would use a credit card if I have a emergency, then I have a few more days to plan how I will pay the emergency, most of the time with my emergency fund, sometimes by cutting expenses, other times there are other choices I can make. However if you live on the edge already, you may not have those options and therefore using a credit card in emergencies is not a good idea.

By: DR

DR — Fri, 12 Feb 2010 01:59:56 +0000

First, where are you going to invest the money where it’s both perfectly safe and earns 10%? Second, remember that the idea behind using the credit card as an emergency fund is so that you can pay down debt now that you have at a high interest rate.

By: Bob

Bob — Thu, 11 Feb 2010 23:47:53 +0000

This is STUPID advice. They are not accounting for risk. If you take a $1000 emergency fund and invest it like they say you could, and get 10% interest you’ll get about $100. If you lose your job and have to use your credit cards for a couple of months not only do you have no way of paying off the credit cards but you could rack up credit card interest payments of way more than $100 (that they say you could gain by investing). I thought this article was just joking, WOW it is really sad that they were serious!

By: Ken

Ken — Thu, 11 Feb 2010 20:52:59 +0000

I say CC as emergency fund a bad idea. Using a CC means you have to pay interest on top of the cost of the emergency. I say online savings account is best route.