Consumers have come a long way in recent years in terms of responsible credit card use. Decades of excessive consumerism contributed greatly to the recession and subsequent shaky economy with which we are all dealing with today. One of the biggest problems consumers have had to overcome is the mismanagement of credit card accounts. When credit cards were first introduced to the public, most consumers used credit sparingly and only when necessary. Balances were paid off as soon as possible and many families kept credit cards just for “emergency” situations.
As we became more comfortable with the concept of available credit, a gradual shift toward more frequent use became a reality. Now, more and more consumers are scaling back on credit card use and once again looking at plastic as a last resort or “emergency” source of funds. Here we look at how you should manage your emergency credit card to ensure credit is available when needed and you don’t have to pay more for the privilege than necessary:
The definition of “emergency” may vary greatly from one person to another. If your idea of an emergency is a great shoe sale on the week you do not get paid, you might have problems managing an emergency credit card well. As a general rule a true emergency affects your ability to pay for housing, food, transportation and other items necessary for survival. Although the definition of emergency in terms of credit card use is subjective, knowing in advance what you are willing to use you emergency card for will help keep unnecessary purchases to a minimum.
Compare Credit Card Offers
Each credit card offer is unique therefore it is important to compare the terms and conditions of each carefully. The ideal emergency credit card will carry no annual fee and offer a low interest rate on purchases. Cash advances are always the most expensive option, carrying higher interest rates and fees. Always try to avoid using your credit card for a cash advance in an emergency if using the card for a purchase is an option.
Credit Score And Credit Limit
An emergency credit card must have a reasonable amount of available credit to cover anticipated emergencies. Consumers are urged to review their credit history and know their credit score before replying to a credit card offer. Ideally, the credit limit would be generous enough to cover common emergencies such as car problems, household repairs or even a medical emergency. If your credit score could use improvement or there are blemishes on your credit report, consider improving these areas before applying for additional credit. By doing so, you can improve your chances of qualifying for an emergency credit card that offers better terms and conditions. This will ensure if the time comes when you really need access to credit to pay for an emergency, you won’t be hit with higher interest rates and possible fees or penalties.