Credit cards for emergencies?

Question

Why do people constantly say that they must have a credit card for emergencies. How stupid is it to pay 20% or so on your emergency? Now you just turned your emergency into a financial disaster. Competent financial planners suggest a 3-6 month emergency fund so that your emergency doesn't become a financial problem. Why then do people own credit cards at all then? A debit card can do everything a credit card can except get you in debt. Oh yes, the rewards! How many people's lives are changed by the rewards vs. those whose lives are changed by massive credit card debt? Oh but I have to build my credit score! Why, so you can make debt payments to get more debt payments? The only debt that you should ever consider is a home and you can get manually underwritten with a credit score of 0. I just don't get all the stupid credit card arguments. Boy, they sure are making all the credit card companies rich though. Why do you own a credit card? What do you all think?

Answer 1

In response to the answer that said credit cards provide more fraud protection than debit cards: That is a MYTH. Credit cards have legally mandated protections not legally mandated for debit cards. But both Visa and MasterCard REQUIRE by contract that any bank issuing debit cards bearing the Visa or MasterCard logo provide the SAME protection for both credit and debit cards.

To the answer about establishing credit: If you don't borrow money, you don't NEED a credit history. You CAN get a mortgage without a credit history. The process is called MANUAL underwriting. Before FICO it was the ONLY way to get a loan.

To the answer about an emergency that is more than your emergency fund: 3 TO 6 MONTHS of expenses will cover ANYTHING long enough to make arrangements better than a credit card.

For anyone unclear on what I think, credit cards are NEVER necessary.

Answer 2

If you are talking about emergence cards. Everyone should have one. This dose not mean you can stop saving. Have you ever tried to get money when you need it? You can't, that's why you get it when you don't need it. AND PUT IT UP.

Now on the other hand let's talk Credit.
1. Auto
2. Mortgage
3. Credit Card

This is what makes up your credit report. If you only have two of them you can never have a complet credit profile. you need auto account over two years in length, mortgage over five years in lenght, and credit cards over 3yrs in lenght with less than 20% bbalance. No lates and your credit score can then and only then go above 800

Answer 3

If your emergency requires more than your "fund," would you rather not get help than to pay a finance charge? I use a credit card for everything. From the smallest purchase in Starbucks, to utility bills, restaurants, gasoline, grocery, pharamacy, etc. I also pay the entire balance every month. I have not paid a finance charge in more years than I care to remember. If I can not afford something, I do not buy it. Simple. I have excellent credit in the top 1%. It's important to have credit to:
--Show creditworthiness in order to get a mortgage or other expensive purchases.
--To have a record of purchases
--So I don't have to carry a lot of cash on me
--If you were a victim of fraud, you have recourse
--And, for an emergency. I may have to skip town in a hurry :-)
If you are against making the credit card companies rich, simply pay your bill in full each month. By the way, by using a credit card, you have the use of their money, free, for a month or so. That's plenty of time. If you can't pay the whole thing off, they are certainly entitled to charge you a fee, a fee that they have divulged from the beginning. They are, after all, businesses, not charity organizations.

Answer 4

The emergency doesn't have to put you in debt... Its two am 4 hours from home you blow a tire ? are you carrying enough cash ? Everyone takes credit cards these days. A credit card has much more fraud protection than a debit card. A fraud on a credit card gets put on hold while it is investigated. A fraud on a debit card wipes out your checking account until the matter is resolved which might take months.

Answer 5

Credit cards are fine if you can control yourself and pay it off every month. Although the 3-6 month fund is ideal. Credit cards are a viable short term alternative while you establish that reserve. It is also a way to access money quickly while you are away and may not have immediate access to our reserve savings.

Answer 6

I got given one by the bank as well. I've never used it as I don't fancy pay extortiant interest rates! I always save up for things I want to buy