4 Reasons Why You Shouldn't Rely On Credit Cards For Emergencies | Refresh Financial

Official blog of Refresh Financial

4 Reasons Why You Shouldn’t Rely On Credit Cards For Emergencies

We all know at least one person who has a credit card "for emergencies", and it's definitely an option when it comes to being prepared for the unexpected. So why do financial gurus and top thinkers all push the idea of an emergency fund? Why not use a credit card for unexpected expenses? There are several dangers of relying on credit cards for emergencies. We'll list a few for you so you can see the dangers.

1. It's not your money

Credit is not your money. You're borrowing it. You wouldn't rely on your parents or your best friend's money for your own emergencies, so why would you rely on a faceless corporation's money plus interest for the same thing?

2. You pay more than required

Because you are borrowing what you spend on your credit card, you are charged interest on your balance. That means that whatever your emergency is going to cost you, it will end up being even more expensive in the end.

3. You risk burying yourself in debt

If you're dealing with your financial emergencies using your credit card, you're turning your emergency into debt. If it's a costly emergency, you could accumulate more debt than you're able to handle in a very short period of time. It could be the first step on a path to financial ruin and the destruction of your own credit. Why risk turning one emergency into another?

4. It'll be harder to cope if another emergency happens

Back-to-back emergencies can be a huge obstacle even if you have an emergency savings fund. If you're only relying on your credit card, two emergencies could see you max out your card, destroy your credit and find yourself buried in debt. A savings fund would at least create some sort of buffer in case two emergencies happen fairly close to one another.

With an emergency savings account, you make interest on your balance. If you use a credit card, you pay interest on your balance. By using a credit card for your emergencies, you're choosing to pay extra. It doesn't make much logical sense, does it?

Your credit cards should not be on standby for an emergency. Instead, discipline yourself and save each month until you have substantial savings to cover unexpected expenses. Save your credit card for building your credit history and credit score.

Great Alternatives to Credit Cards For an Emergency Fund

Credit Building Programs

A credit building program, like Refresh Financial's Cash Secured Loan, is a low-risk method of rebuilding your credit that requires no up-front cash and will report your on-time payments to the credit bureau just like an installment loan. This is an extremely easy and low-risk way to build credit and put away money for an emergency fund.

Secured Credit Cards

A secured credit card is when you put money down to act as collateral for the credit you’ll be given on your card just like Refresh Financial's Guaranteed Approval Visa Card. Not only will this card help you build your credit and report regularly to the credit bureau, but it can also be used in emergencies just like a regular credit card. The great thing about this option is you are using your own money instead of going into debt.

Refresh Financial's Cash Secured Loan and Secured Credit Card can help you in emergency situations without going into debt.

Learn-More-RefreshFinancial.ca

Have you ever relied on a credit card for emergencies? Let us know in the comments!

Leave a Reply

Your email address will not be published. Required fields are marked *

*

54 − 44 =

    What Canadians are saying about Refresh

    I would like to thank Refresh Financial for helping me get out of a bad spot. I never thought it was possible and almost gave up on things and then I saw Refresh Financial and and gave it a try. At first I was unsure of things but to see my credit score now makes me a believer in this program.

    – Aaron A

    “It hasn’t even been a year yet, possibly only 6-7 months, and my TransUnion score has gone up over 100 points. That was only the tip of the iceberg as recently I was able to get a consolidation loan from my bank that allowed me to move forward and make things easier for me. Talk about second chances!”

    – Angelica M

    “I am now in a position where I am able to obtain credit (just bought a brand-new car and refinanced my mortgage for a fantastic rate) and it took little to no time at all. I would 100% recommend Refresh to anyone looking to rebuild credit with as little hassle as possible.”

    – Cathy M

    “I had not heard of a company doing such a thing before someone suggested it to me and it made sense. I am not very good at saving money and Refresh Financial helped me. I have dealt with them for years now and never had a problem. The customer service is excellent and fast.”

    – Chris C

    Refresh helped me regain credit following a nasty divorce, which left me with a very poor rating. They were able to remarkably help me go from a 480 to a 600 score, in just over a year. Thank you Refresh!”

    – Deb K

    I have watched my credit score jump since being with Refresh and I have already recommended it to friends and family. Thank you for helping me build my credit faster for my future and my children’s future :)”

    – Heather T

    At first I was skeptical because I wasn’t getting funds upfront and had to make payments when I really needed the money. I’ve been in the program a year now and have noticed my credit has improved drastically!”

    – Irene L

    I have been a client of Refresh Financial for approximately 3 years. Since being a client they have improved my credit immensely. Definitely recommend this company to anybody that needs help re-establishing credit.”

    – Jason I

    “I recommend this program to anyone having credit issues. At the end of the agreement, your money is refunded to you. There were times I found myself short on cash and Refresh, with permission, used a portion of my money to clear up my arrears.”

    – Margaret L

    “I would like to thank Refresh Financial for their professionalism, great customer service and for helping get back to a better financial situation. I have always been treated with the utmost respect.”

    – Martine B

    Refresh Financial is an amazing program to help people get back on their feet. I was rock bottom with nowhere to turn. My credit was beyond poor. I would recommend them to anyone. If I can do it surely anyone else can.”

    – Matthew S

    “Great company to deal with for rebuilding credit, very simple process to get started. Good service if you ever have questions.”

    – Mike L

    This business truly cares about its clients. The customer service is always quick to return calls or emails. Their online portal functions very well so as a customer you are always updated as you progress with your loan.

    – Phil J

    “Refresh Financial has made us more aware of how to take care of our financial situation and be more responsible, and making payments on time is rewarding in the end for credit. Thank You sincerely.”

    – Rocky M.

    “Refresh financial is great!!! They boosted my credit score, helped me save money and helped my husband and I buy our house;) I was not only a number to them, they stayed in touch and helped me out along the way. Answered all my questions and concerns.”

    – Sara B

    “Refresh Financial had been exceptionally good to me! I’ve just been out on medical leave and they have accommodated me with my payments without hesitation!! I was in a really bad spot with my credit and they have helped me to try and correct it!! Bravo!”

    – Shannon B

    This company has been nothing but fantastic. They have gone above and beyond to help me. This program has given me the relief and peace of mind I need. I would certainly go back to them and give them names of people who could use this.”

    – Shirley K

    The financial services products are excellent for new immigrants, low-income earners and small business owners. Loans, savings and credit building all in one solution is a perfect fit to help with financial goals and stability.”

    – Soraya H

    “After successfully going through a credit rebuilding loan, I was able to use my built-up equity to purchase a newer vehicle and I have since been approved through a financial institution for a loan.”

    – Tanya W

    “I made some poor credit choices when I turned 18 and have always had this lingering thought of how am I ever going to better my score. Since being with Refresh I have realized that I took the right step towards bettering my future.”

    – Taylor B

    I’m so excited I’ve joined refresh! I’ve already seen a huge increase on my credit after the first month! The staff are a delight and make this so easy to understand. I strongly recommend Refresh Financial even if you have good credit this will give you a boost and you’re saving money with the reverse loan!”

    – Wayne B