Credit Cards for Emergencies Revisited
Well, Madison and my Great Credit Card Debate has inspired further commentary out in the blogopshere, and yesterday Shana at Smart Easy Money brought up the “What about an emergency?” scenario for keeping a credit card. Longtime readers here (all 15 of you LOL) will remember this very question is what kicked off my credit card debate with Patrick from Cash Money Life. Here’s the run-down:
It all started with a T-Shirt I saw on campus that said “I know the credit card is for emergencies…but she was HOT!” I went off on that mentality, and that was the first time I said I don’t think anyone should have a credit card. Well Patrick called me out on that statement and we went back and forth a few times before agreeing to disagree. Although I do love his analogy between credit cards and guns.
This time around, the subject of what to do in an emergency didn’t come up between Madison and me. But since Shana brought it up I will recap what I left in her comments:
As I said, I have nothing against the actual pieces of plastic, but let’s face it, the companies behind the credit cards are NOT your friends. I have much more important things to do in my life than to vigilantly watch over a credit card company, then continuously call their version of “customer service” to get mistakes straightened out.
As for emergencies, I have an emergency fund of over $1600 currently, and once the truck note is paid off this spring I will be upping that to $11,000. That should cover just about everything, including replacing my central-heat-air unit. (knock on wood)
I still whole-heartedly advocate having a cash emergency fund. Since I first set up the baby emergency fund last January I have had my heat fixed with cash, completely replaced the brakes on my car in May, and most recently dealt with more car repairs last month. With the tow charge, I literally paid cash: two $20 bills, one $10 bill, and one $5 bill. Paying for the parts and labor was just a matter of whipping out my debit card and completely worry-free for me. It’s amazing how an “emergency” is more like an annoyance when you have the money to pay it.
So, as y’all can see the “What about having a credit for an emergency?” argument just doesn’t hold water when you can achieve the same result with cash. And, to turn the credit card rewards argument on its ear: I earn interest on my emergency fund! How many folks who keep a credit card just for emergencies earn interest on that account?
