6 Smart Ways to Use Your Credit Card When You Have No Emergency Fund

Emergency funds are critical tools in a financial plan to ensure you’re never stuck in a situation where you’re scrambling for money. It’s not easy to save when money is tight, and many people resort to using their credit cards as makeshift emergency funds. Is that the right way to do things, and how can you ensure you use your credit cards responsibly? Here are six ways you can utilize your credit cards smartly when you need them for an emergency.

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1. Utilize cash back and reward point redemptions often

Most credit cards offer cashback and reward points for purchases, so consider using them to pad your emergency fund. For example, you may be able to get bonus membership points at gas stations, grocery stores, or supply stores if you’re a small business owner, making your sudden costs work for your benefit. Alternatively, utilizing cashback can also help reduce your balances, lowering the total cost of your emergency expense.

2. Try not to spend more than you can afford to pay off every month

When using your credit cards for emergencies, it’s important not to spend more than you can afford to pay off in monthly installments. This way, you’re not drawn into the cycle of debt, and you have a cushion should something unexpected happen.

3. Make sure you’re using your card for necessary expenses only

When using your credit card for emergencies, make sure you only use it for necessary expenses. This means that you shouldn’t spend money on frivolous items or entertainment that won’t help address the emergency. If you start slipping into unnecessary spending habits, you could find yourself in debt quickly and may find yourself researching how to get a personal loan to consolidate your debt to prevent your credit score from tanking.

4. Stick to cards with low-interest rates and no annual fees

If you can’t pay off your balance in full each month, stick to cards with low-interest rates and no annual fees to avoid accruing extra debt in an emergency.

5. Use credit instead of cash advances

If you can use your credit card as a credit purchase, you’ll have a more extended grace period where interest doesn’t accumulate. Interest will begin to accrue immediately on a cash advance, so try to avoid withdrawing a cash advance from your credit account as much as you can to save on interest.

6. Keep an eye out for balance transfer promotions

Many credit card companies offer balance transfer promotions where you can transfer your current debt onto a new card with a lower interest rate to consolidate your debt and potentially save money on interest payments. If your emergency expense is higher than what you can typically pay off in a given month, it could be good to transfer that expense to a new card with a 0% promotional APR. However, don’t use this strategy too often, or you could end up with more debt than you expect.

The bottom line

Credit cards should never be considered “extra” money since using them irresponsibly can get you into debt quickly. However, when you need a quick infusion of cash and have no other options, using a credit card can be an intelligent decision.

Author Profile

Sarah Meere

Executive Editor

Sarah looks after corporate enquiries and relationships for UKFilmPremieres, CelebEvents, ShowbizGossip, Celeb Management brands for the MarkMeets Group. Sarah works for numerous media brands across the UK.

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