For virtually everyone, there comes a time in which an emergency or unexpected expense occurs, which can leave any home or family struggling to make ends meet. Proper preparedness can mitigate much of this risk – such as the creation of a rainy day fund that covers several months of expenses – but sometimes even this is not enough to prevent financial catastrophe. It is for this reason that it is important to have access to an emergency line of credit when the worst-case scenario manifests. What should credit card users consider when selecting an appropriate emergency credit card? Below, we will discuss four traits that make up any good emergency credit card solution.
Whenever you are in need of emergency credit, the last thing you wish to worry about is whether or not the card in question will be accepted. While all credit cards are accepted by hundreds of thousands of retailers and institutions worldwide, some have a broader reach than others. If you have to use a cash advance to obtain the funds in order to pay for certain expenses, then you will be liable for additional fees and charges. In order to avoid this scenario, select a card that is widely accepted (Visa and MasterCard, for instance) and avoid those with less than universal acceptance (Discover and American Express).
Large Line of Credit
An emergency credit card should exist for one primary reason – to cover the full balance of any unexpected financial disaster or need. It is for this reason that many credit cards are not suitable, as the lines of credit included may only be $500 or $1,000 – usually not enough to cover the larger emergency expenses that can arise. While there are limits on what your line of credit will be due to current credit history and income, any credit card user should strive to obtain a credit card for emergency expenses that has at least a $5,000 line of credit.
Credit Over Charge
The reality is that not all “credit cards” are truly credit cards – some cards are known as charge cards, which have limited purchase amounts and are designed to have their balances paid in full each month. For larger expenses, a charge card will not suffice. In this case, you need to verify that the card in question is a credit card and comes with no limits on expenditures (save the credit limit). This will avoid any hassles and heartache when a problem arises and you try to use the card but find out that you cannot.
Low Interest Rates
If you have to pull out the emergency credit card to handle certain expenses, then there is a good chance that you will not be able to pay off the balance in one or two months. For this reason, it is vital that any emergency credit card have the lowest APR possible in order to avoid hundreds or thousands of dollars in added expenses. Do not be fooled by teaser rates, as these are usually useless for emergency credit cards (unless you plan on having an emergency within the first 6 or 12 months of owning the card).