What’s the Best Credit Card for an Emergency?

Although the best way to pay for an emergency is by using the money from your emergency savings account, the truth is that not everyone has enough money in their account to cover an emergency. It can take several months to build a sizeable emergency fund. In the meantime, you have to cover emergencies somehow. If you must pay for an emergency with a credit card, make sure you pick a good one.

A Credit Card With Available Credit

Before you put your emergency on a credit card, first make sure you have enough available credit. Just because you have a high credit limit doesn’t mean you have room on the credit card for another purchase. It’s a good idea to check your available credit on your credit cards before you make any purchases, especially an expensive emergency. Keep in mind that the less available credit you have on your credit cards, the more your credit score is affected. But, you can recover those points when you pay your balance down.

A Credit Card With a Low Interest Rate

Ideally, you’d put your emergency on a credit card with a $0 balance and pay off the balance before the grace period expires. You might not be able to make that happen, especially if your emergency is expensive and more than your disposable income in a particular month. If you can’t pay your emergency balance in full, the next best thing is to pay it off at a low interest rate. So, keep your credit card interest rates in mind when you’re picking a credit card to use for emergencies.

A Credit Card With Rewards

Earning rewards is a nice benefit of using a credit card, even one that you have to use for emergencies. If you have a rewards credit card with available credit and a low interest rate, use it. But, rewards are the least important thing to think about if you’re facing an emergency.

Keep an Emergency Credit Card Available

If you don’t have an emergency fund, you can count on using a credit card to fund emergencies if one happens. In that case, keep a credit card available and ready to use just in case an emergency happens. The last thing you want to do is apply for a credit card to pay for an emergency because you may not be approved or your credit limit may not be high enough to pay for the emergency.

When you designate a credit card to use for emergencies, don’t use it for any other purchases or balance transfers, with one exception. Creditors often close credit cards that aren’t used for a certain period of time. Because of this, you should use all your credit cards periodically – at least once every few months – so the credit card issuer doesn’t close it for nonuse. You might miss a notification that your credit card has been closed, so check every few months to make sure your account is still open and active.