Is using a Credit Card as an Emergency Fund a Smart Idea?

Credit cards have become an integral instrument in everyone’s financial management. They bring a lot of convenience and flexibility to the table, not to mention the benefits they offer. Today, you can get a lifetime free credit card online almost instantly. This ease of access and the associated rewards are their greatest attractions.

Not to mention, they are perfect for credit building and offer you liquidity during a cash crunch.


But is using a credit card as an emergency fund a smart idea?

To answer this, you have to consider some factors. Here are some questions to ask before making this decision:

  1. How Much Money Do You Need?

While having an emergency fund set aside is a good idea, your expenses may not always fall within this budget. So, the most crucial factor in deciding how to fund your emergency expense is to know how much funds you have and how much more you need. When your liability is known, you can check whether you can cover the higher payments for a few months. This way, you will know if you can handle your debt efficiently.

  1. How Soon Do You Need It?

Knowing the timeline for your expenses will help you plan your sources accordingly. For instance, in the case of a medical emergency, you may have to pay a considerable sum at once or cover the expenses for a few weeks. Based on your credit card billing and payment cycles and expense timeline, you can decide whether using a card would be the ideal choice.

  1. How Long Will You Need to Repay It?

You can use a credit card without hesitation if a cash influx is coming your way soon. For example, if you have an emergency right now but yearly incentives are a month away, you can happily use your card and pay it back after a month. If not, you need to figure out how long it will take for you to repay the credit card dues.

  1. How Are Your Spending Habits?

Another factor to consider is how you deal with your expected expenses. If you have them well handled, you can determine how much you may need to stretch to cover your emergency expense. Another factor is your credit card limit. If other expenses already take up your limit, you may need other means to fund your emergency. One of those could also be getting a personal loan solely for this, provided you have a decent credit score.

To Sum Up

Ultimately, whether or not a credit card emergency fund is the right move would depend on what the emergency is and your financial situation. You should keep the above questions in mind while deciding on using your credit card for a particular emergency.

Looking for the right credit card. IndusInd Bank offers a variety of credit cards that can provide you with the benefits you need to stay financially sound. IndusInd Bank has the perfect cards for you, whether you’re looking for a card with attractive interest rates or high reward programs. If you’re interested in learning more about IndusInd Bank cards, reach out to IndusInd Bank to apply for a credit card now. Apply Now!