It is common sense to have an emergency fund in place to help us during unforeseen financial emergencies. This is possible only when there is a strong cash balance in any of the savings accounts that yield high returns. This cash should be looked towards only in situations when you have no other options but to delve into your savings. However, things have changed drastically these days. People are no more dependent on their high profit savings account but on credit cards to bail them out of emergencies. The credit card can prove to be really useful when you don't have anys money saved up for tough times. But, it is important to note that there are both benefits and drawbacks associated with using these cards during times of financial emergency. Simple steps can ensure you don't get into the debt trap easily.
One of the mistakes made by people is that most of them who intend to use credit cards for emergencies end up using them for almost every expense.
Hence, when the actual emergency arises, they find themselves in a fix with their credit cards maxed out and having no cash funds to delve into. This negates the entire purpose of holding credit cards for emergencies. Emergency is not about paying utility bills or taking family members out for dinners or even shopping. Define the term emergency before you apply for a card to help you during such times.
To ensure the emergency credit card is indeed available for use during such circumstances, clear off all the debts on the card regularly. It is not a happy situation when you have used the card for one particular situation and have left the debt accumulate and don't have any help on hand when another emergency hits you on the face. In fact, a lot of people are resorting to various other small time jobs to supplement their income. Use the money earned from such jobs to clear off all dues on the cards and keep them ready for use during unforeseen circumstances.
Just because there is a need for a credit card during emergencies, don't jump at any credit card offers that come your way. Innumerable people have gotten into the debt trap by choosing the wrong credit card without reading the terms and conditions. With the new rules and regulations tightening the belts of the banks, these entities are finding newer ways to make up for the amount they are losing. Hence, make a well informed decision while choosing any credit card with the intention of putting it to use during emergencies.