While it’s true that you never know what is going to happen, you need to ask yourself what really qualifies as an emergency, and what you should and should not use your credit card for.
Following are 2 lists of "emergencies:"
- One includes the type of circumstances that credit cards should be used for.
- The other highlights those situations that credit cards should not be used for.
Emergencies That Credit Cards Should Not Be Used For…
Clothing for special events such as weddings and proms – These events are not surprises. Save for them and then purchase the outfit you can afford.
Don’t miss: How To Make A Budget In 6 Steps.
Rental cars – You don’t need a credit card for rental cars these days. Even if a rental company happens to insist on a credit card, you can reserve the car with the card and then pay for it in cash.
Emergency car repairs and new tires – While you cannot predict a sudden car crash (which would warrant the use of your emergency credit card), you know when your car is getting to the point that it needs service or new tires. This is a monthly budget item, not an emergency repair.
Food – Nothing that will be gone in a matter of minutes is worth paying for several months (or even years, depending on the interest rate on your credit card). Food should included in your regular monthly budget. If you are hungry and broke, then purchase some Ramen soup for 20 cents or a hamburger off the dollar menu.
Home appliances – Many people consider home appliance repairs as emergency purchases. However, you should know that after year 5, it’s time to start saving for a new appliance instead of paying for repairs as you go. Even if your oven catches fire on Christmas Eve (as mine did), you will still have other cooking appliances that will get you by until you can save for a new one.
Annual vacations – There is nothing unexpected or "emergency" about a trip that you take yearly. If you know you are going away in June, you need to start saving in January after you have completed your Christmas spending.
Here’s how to budget your next vacation.
Emergencies That Credit Cards Should Be Used For…
Bereavement travel and expenses – With bereavement travel, even when they are willing to give you discount airfare, you will have to pay upfront and get your discount later. When you don’t have time to save enough money to travel to bury someone or see a sick family member, your credit card will come in handy.
NOTE: If you are disciplined with your credit card and use it for non-emergency reasons as well — paying it off each month — then a frequent flyer mile credit card will get you to your destination practically free.
Someone needs to be bailed out of jail – Of course, you always have the option to leave the person in jail, but if it’s you that gets arrested (and it can happen to the best of people), then a credit card will get you out of jail and home as quickly as possible so you can try to figure out the mess you are in.
Natural disaster – Due to a flood, fire, or other drastic situation, you may find yourself temporarily without a home. That is a good time to use a credit card. Even if emergency funds are available, it may take some time to get them. So a credit card is a good buffer during these times.
Medical emergency – The last thing you want to hear when you or a loved one is sick and in need of a test or procedure is that your insurance won’t cover it. This is a good time to put a credit card on the counter and deal with your insurance company later. It’s worth noting that hospitals will gladly provide you with a "medical credit card" at an astonishing rate, but it makes a lot more sense to bring your own credit card with you.
Pet care emergency – You can’t help it if your pet drinks something harmful, gets hit by a car, or is diagnosed with a disease or illness. Since pet insurance is not a the top of most peoples’ list, using a credit card to pay for emergency pet care is within reason. Still, before you take out your credit card, be aware that many veterinarians will allow you to pay over time — with no interest.
More About Credit Card Emergency Uses
- How To Avoid Using Your Credit Card As An Emergency Fund
- Emergency Savings Calculator For Unforeseen Expenses
- How And When To Use An Emergency Credit Card
- Emergency Fund vs Credit Card
- When Credit Cards Lead To Bankruptcy
- How To Build An Emergency Fund In 6 Easy Steps
- Pros & Cons Of Going Without A Credit Card
- When Credit Cards Come To The Rescue
I have been a certified tightwad since I became pregnant with my first child and decided to find a way to stay home with him. I enjoy sharing my experiences in my journey back to financial health and planning for a future — which will include sending 2 kids to college and early retirement.