Best Credit Card for Emergencies
Incidentals might be better-termed "stuff happens"...or use your imagination. However, emergency credit cards can be a valuable resource if you're not walking around with vast amounts of cash like many others.
In this post, we'll review what to look for in an emergency credit card, the top emergency credit cards available, as well as some tips on alternative payment options before grabbing that card.
What to Look for in an Emergency Credit Card
1. $0 Cash Advance Fees
If you've ever had a credit card, you know most credit card companies have cash advance options. Credit cards are convenient to withdraw cash but usually come with a 3%–5% surcharge. Additionally, the money you withdraw is often subjected to a higher cash advance APR.
When looking for an emergency credit card, keep an eye out for companies that offer zero cash advance fees. However, it's essential to read the terms and conditions to see if there's a higher APR on cash advances. Because you're charged interest when you withdraw cash, it's necessary to understand your credit card's APR.
In exchange for rewards and perks, many credit card companies charge an annual or monthly membership fee. However, emergency credit cards aren't used enough to earn substantial rewards, eliminating the need to pay for that option.
Fortunately, there are many no-annual-fee credit cards available. Even better, some even offer rewards. You'll find plenty of credit cards that offer no annual fee, but make sure to shop for the lowest interest rate.
3. Low APR
Speaking of interest rate, this is probably the most crucial attribute of any credit card. Interest rate is what you pay to borrow money from the credit card company. No one wants to have high interest and a credit card balance that's hard to pay off.
Look for credit cards with an APR below the national average of 17%. If you have a good credit score, a good APR would be considered 14%. If you're banking with a credit union, you might be able to receive below 10% if you've built up enough trust with them. Low APR credit cards should take top priority when looking for emergency credit cards.
4. 0% Intro APR Offer
Many credit card companies offer a 0% intro APR. These promotional-type offers generally waive interest charges for the first 12 to 18 months, known as the introductory period.
To be aware of these offers, you must pay off the balance before the trial period ends to avoid interest charges. Another factor to consider with introductory cards is that there's an expiration date on the trial period. After you've had the card for a certain amount of time, your interest payments begin.
Other Things to Look for in an Emergency Credit Card
- High Credit Limit: This ensures you'll be able to cover any emergency financial setback.
- No Overseas Transaction Fees: Frequent international travelers can save around 3% by acquiring cards that offer travel rewards and no foreign transaction fees.
- Revolving Line of Credit: These cards let you pay off interest over time rather than in full each month.
List of the Top Emergency Credit Cards
Below are listed the best credit cards to use for emergencies. Each card offers something a little different for each type of emergency. Ultimately, choosing the best card is subjective based on your needs. Some people, for example, may travel more often and need a card with no foreign interest fees. Others might want a business emergency card for better customer security. Read on to learn which credit card best suits your needs for an emergency.
The Wells Fargo Reflect℠ Card offers customers $0 annual fee. The card comes with a market leading 0% intro APR for up to 21 months from account opening , after which you'll be charged a 13.74%-25.74% Variable APR. This makes the Wells Fargo Reflect℠ Card an excellent choice for potential emergencies or even everyday use.
Featuring $0 annual fee and a solid rewards system, the Chase Freedom Unlimited® is another good option to consider. Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. As an added bonus, make 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases. This card offers a 0% Intro APR on Purchases for 15 months and 15.24% - 23.99% Variable after.
The Ink Business Cash® Credit Card is one of the only business cards that offer a 0% Intro APR on Purchases for 12 months. If you're a business owner, you know how an emergency could cost you money, making this card ideal. After that, the Regular Purchase APR is 13.49% - 19.49% Variable. Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year. Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year. Earn 1% cash back on all other card purchases with no limit to the amount you can earn. Additionally, there is a $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening.
No list would be complete with out the Capital One Quicksilver Cash Rewards Credit Card. This highly competitive $0 annual fee card has a 0% intro on purchases for 15 months. Ongoing APR is 15.24% - 25.24% (Variable). That is months of not having to worry about about extra costs on spending. With a rewards rate of 1.5% Cash Back on every purchase, every day and 5% Cash Back on hotels and rental cars booked through Capital One Travel (terms apply) and a $200 Cash Back after you spend $500 on purchases within 3 months from account opening, this card is a popular choice.
When to Use Emergency Credit Cards
Credit cards should only be used as a last resort for emergencies. A hurricane, for example, could impede you from getting the necessary supplies without using a credit card. Medical emergencies would also be a prudent time to consider using an emergency credit card. No one wants additional debt, especially if there's interest, so only use your credit card in dire circumstances.
Are Secured Credit Cards Helpful During an Emergency?
It depends on your financial health. If you have good credit and a low to 0% interest rate, secured credit cards can be a convenient way to withdraw money for an emergency. Some companies also offer rewards that can benefit users. Overall, however, it's best to find some other form of payment. Some risks that come with using a credit card include the following:
1. High-Interest Rates
Any credit card you carry will have interest rates from 13%–25%. Having to bear the financial burden of an extra 15% or more on top of your bills every month can drag you down financially.
2. Unnecessary Bills
Your hard-earned money, even if it's an emergency, should not be going to anyone other than your best commodity—yourself! Some people can fall into the dangerous game of only paying off the balance each month. In which case, you're not doing anything other than paying the bank each month with no foreseeable return on investment.
3. Credit Cards May Seem Like Monopoly Money
Because of their convenience, some can fall into the trap of thinking they'll spend now and worry about tomorrow another time. Even if it's an emergency, you're still going to have debt you'll have to repay one way or another.
4. You're Risking a Bad Credit Score
If you plan on buying a house, car, or any other big purchase in the future, you'll need to have good credit. Once you max out your credit limit, your score will be affected. Known as the credit utilization ratio, this is the amount you owe regarding your credit limit.
Consider an Emergency Fund vs. Emergency Credit Cards
An excellent option for protecting yourself from credit card risks is creating and building an emergency fund. You can start with a minimal amount, for example, $1 a day. If you're already saving 5% of your income, consider adding 1% for emergencies.
Unfortunately, life is not perfect. No one will escape emergencies. Knowing this in advance can make a big difference in motivating your emergency fund. By avoiding credit cards altogether, you can start building healthy financial habits. Only pay for what you can afford.
After you're comfortable depositing a little extra money into an emergency fund, you won't even miss it. And after one year, at $1 a day, for example, you'll have a $365 emergency fund. Put more in, if you're comfortable, knowing that when an emergency hits, and it will, you'll have little to worry about financially.
Another way to start your emergency fund is going through your garage or closet and getting rid of items you don't use or haven't used for years. You might surprise yourself by finding something valuable. Sell it on eBay and use that money for your emergency fund. Side hustles, like writing, are an easy way to make a quick buck and can be used for any emergencies down the road.
Should You Use a Credit Card for Emergencies?
Once you've created a nice nest egg, you may want to consider having that extra layer of backup with an emergency credit card. You'll certainly be more respectful about your money situation, and the card will act as a backup for your family or business.
Bad credit and debt can leave you feeling drained. By incorporating a few of these tips, you'll create better wealth management and self-esteem. As you start to save, it will become addictive. You'll begin to see your savings and emergency balances go higher and higher. It will create more frugal spending habits, as well.