Can credit cards be used as emergency funds?

Using a credit card has always been associated with overspending and it seems quite unnatural that the same card can be actually used as an emergency fund. Although, you may not get a definite answer on the same, there are several options that can be analyzed before you reach the conclusions that the credit card can be used as an emergency fund. A majority of people accumulate credit card debts while using it as an emergency fund.

For the Americans however, there is hardly a second thought which comes into their mind and a credit card is the most common option for the Americans to use as an emergency fund. A majority of people feel that credit cards can be used as an option to get emergency money and the bills that get racked up behind is never a lookout for the consumers. It is this habit that has led the Americans into the greatest of financial deficiencies during recession. Fortunately, the credit card debt management services could deliver the people from their trouble and also their myths about using credit card irresponsibly. However, a credit card can actually act as an emergency fund but not for very big issues like health disasters etc but perfect for a car repair for instance. An emergency fund is ideally considered as a fund which can be utilized to tackle disasters but using a credit card as one may also expose it to a lot of risks at the same time. Let us assess the risks at first. Using a credit card as an emergency fund may actually leave you at the mercy of the regulations of the credit card companies. Your credit limit can be altered or changed suddenly and a few defaults will actually make you cash strapped when you will need your emergency fund the most. On having a closer look this may not be an emergency fund in the real sense of the term. Those consumers who have relied on the credit cards to pay their utilities, they have actually ended up accumulating huge credit card debts eventually. An emergency fund should ideally constitute the living expenses of one month and it may usually take a long time before you have accumulated a substantial fund therein. A credit card on the other hand will help you to have quick cash in hand and not make you fret to accumulate a good amount of money. To speak truly, it is better to avoid usage of credit cards as an emergency fund in order to avoid credit card debts.

Some tricks that will leave the consumer with finance charges along with credit card debts

Credit card companies are always on the lookout to dredge your money and to make your bills go higher. While it is impossible to take on the credit card companies simply because their techniques to siphon money from the consumers are based on legal premises. The consumers who have been using credit cards for some time now are quite familiar with the fact that the credit card fees are certainly not in the best interest of the consumers. The American consumers are more familiar with credit card debts due to random use of credit cards

One of the most significant features that are associated with credit cards is that they are equipped with changing rates of interest that may change on the basis of certain factors. While the advantage of this is that the consumers are required to pay lesser interests when the prime rate or the fed funds rate is lower; the credit card companies are usually going to keep the interests rate reasonably higher despite the fact that the index are low.

The next fallacy is that of a shorter grace period which will keep the consumers cash strapped and put them down with rampant finance charges particularly on the new purchases. The best way is to use the online access to pay the credit card debts or to mail the payment as soon as you receive the bills.

Although, the subprime credit cards are not supposed to charge more than 25% but in reality, they are charging upfront fees from the consumers even before the account is opened.

Since the credit card companies are not able to charge the inactivity fees if the cards are not used for a longer time, they are now charging annual fees from the consumers who have not made a certain amount of purchases using the credit cards.

Although, the CARD act states that the companies are not supposed to charge late fees, if the credit card debts are received on a working day which falls after the weekend, the reality is different. In fact, the consumers can make the payments through telephone or online at any time of the day. The best way to avoid the finance charges that can add to the credit card debts is to remain well informed about the regulations of the credit card companies.