When are Emergency Credit Card Charges OK?
A lot of people end up with mountains of credit card debt because they simply don’t understand how they work. For whatever reason, they never received any advice about credit cards – with one exception. Almost every one has heard from their parents or grandparents or somebody, at some time, “Credit cards are only for emergencies.” This is great advice, until you try to arrive at a definition of “emergency.”
Some emergencies are obvious. Unexpected medical bills are one example of an emergency that can catch you off guard. Many people consider car repairs another form of emergency that justifies credit card use. You need your car to get to work, after all, and you can’t afford to lose your job.
What about when the TV breaks? As ridiculous as this will sound to some people, others consider this a real emergency. They think nothing of heading to the shop with their AMP Credit Cards the second the TV fails to work.
You can see how broadly “emergency” can be defined, and how people manage to convince themselves it’s OK to accumulate debt on credit cards. If you currently have a lot of debt, you can’t continue to take this approach to using credit cards. Basically, you are living beyond your means.
In reality, you should prepare for car repairs and appliance failures with a savings fund. Keep your choice of No Annual Fee Credit Cards on hand for real emergencies, and find a way to pay cash for other expenses.