Why Credit Cards Aren't Great For Emergency Expenses

August 20, 2021 | June Mckaig

secured credit cards not for emergency

 

A lot of people use unsecured or secured credit cards to cover emergency expenses. This idea may not be as great as you may think. The truth is, there are probably better methods to help you out with emergencies than to reach for your credit cards. Here are a few reasons why you should reconsider using credit cards for emergency expenses.

5 Reasons To Avoid Credit Cards For Emergencies

1. Your Credit Limit Could Be Cut

Some people have credit cards that they do not use. Instead, they keep them just in case they need to use them in an emergency like to cover unexpected bills, repair costs, appliance replacement, and so on.

The problem is that if a credit card company sees that you are not using a credit card, they may end up cutting your credit limit. This means that if an emergency does appear, you may not have the funds available to cover it.

2. Some Companies Do Not Accept Credit Cards

One of the main reasons why people have credit cards is to cover emergency repairs like a broken stove, vehicle, and so on. The problem is that many of the companies that deal with repairs may not accept credit cards as payment.

This is because there is actually a little bit of risk in accepting credit cards. This means that you may have credit cards put aside for emergencies, but you may not be able to use them for what you want.

3. Your Credit Rating May Suffer A Hit

There are actually a few problems with your credit rating here. Firstly, applying for credit cards is going to cause a hit to your credit score. Even if your credit card application is not approved, your score will fall.

If you leave credit cards unused, then your credit score will also fall. This is because lenders want to see that you are using a certain amount of your available credit – roughly 30%.

On the other hand, if you use your credit card, then your score will fall. After all, it means that you are now using up some of your available funds. This also does not look good to lenders.

Basically, if you have credit cards for emergency expenses then you are pretty much in a no-win situation. Pretty much anything that you do can have an impact on whether you can borrow cash in the future. It may even impact your employment opportunities.

Related Content: 6 Money Mistakes Most People Make When They Have Bad Credit

4. Your Credit Card Debt Will Grow

If you use credit cards then the amount of debt that you have will grow. It is all well and good if you pay off any debt that you have at the end of the month. However, let's be honest, most people only ever meet the minimum repayments on their credit cards. This means that the cost of using a credit card can get pretty high.

Since we are positive that most people do not want to saddle themselves with debt for years to come, avoiding using credit cards to cover emergency expenses may be a good choice.

Remember, these cards have astonishingly high fees too. This means that if you just have a personal credit card sitting around for emergencies, you are going to be paying large sums of cash just because you own the card.

5. Low Spending Limits

Secured credit cards tend to have low spending limits. This is because they are designed to build credit rather than act as emergency funds. After all, you have to deposit cash as collateral to even qualify for one of these credit cards.

As a result, a lot of secured credit cards actually have rather low spending limits. Some even start as low as $50 to $100. This is not going to be enough to cover emergency expenses, particularly since you are going to need to top that card up again in the near future.

 

payday loans Nevada

 

Nevada Payday Loans Could Be An Alternative

Payday loans from Nevada Title and Payday Loans, Inc. could be a good alternative to using secured credit cards to cover emergency expenses. In fact, there are several benefits that payday loans online will have over credit cards:

  • There will be no hit to your credit score since we do not report to agencies.
  • You can apply even if you have bad credit.
  • Payday loans Nevada are designed to be paid off at your next payday. This means that you won't be dealing with tons of debt long-term.
  • Payday loans Nevada will be paid directly into your bank account. This means that you should have no issues using cash as payment for certain emergency expenses.

The process of obtaining payday loans near me from Nevada Title and Payday Loans, Inc. is simple. Start an inquiry online and one of our friendly loan representatives will give you a call to help get you started with the process.

Remember To Look For Alternatives For Emergencies

Secured credit cards are not great for covering emergency expenses. You should start looking for alternative forms of help when you really need it. Payday loans can be a viable alternative. If you are interested, fill in our inquiry form today and speak to one of our representatives within minutes.