5 things to look for in a credit card for emergencies
Pick the right emergency credit card and you can avoid these ongoing charges.
When an emergency strikes and you need cash, swiping a credit card isn’t ideal, but it can be necessary.
In a perfect world, you would have a solid emergency fund to draw on in these situations. But in the event that you don’t have enough cash to cover an unforeseen expense, an emergency credit card can come in handy. While you can cover an expense with your savings, transferring money from a savings account can take several days. That’s why it’s a good idea to keep a credit card handy in an emergency.
By researching the best credit cards and keeping an eye out for the following important features, you can find the perfect emergency credit card – one that is convenient to use on the fly and has minimal fees.
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1. Low APR
Perhaps the most important feature of any credit card is its interest rate, because that’s what you pay to borrow money. This is certainly true if you plan on carrying a balance, as a high interest rate can make it difficult to pay off even a moderate credit card balance.
The best low interest credit cards charge an APR well below the national average of almost 17%. A good APR for a credit card is less than 14%, but you will need to have good credit to qualify. Some credit unions may even offer credit cards with an APR well below 10% to their more creditworthy members. When looking for a credit card for emergencies, prioritize these types of cards in case you need to charge a large amount and pay it back over time.
2. No annual fee
Many credit cards charge an annual membership fee in exchange for additional benefits and rewards. However, if you get a credit card for an emergency, you probably don’t plan on using it often enough to earn big rewards. In this case, the payment of an annual contribution is not justified.
Fortunately, there are plenty of no annual fee credit cards to choose from, and some even offer rewards. You’ll still want to prioritize low interest rate cards, but you can find plenty of them with no annual fee.
3. No cash advance fees (and a low cash advance APR)
Most credit cards allow you to make a cash advance, which involves withdrawing money from your credit card at an ATM. Unfortunately, cash advances tend to incur fees of 3% to 5% of the amount withdrawn. The money you withdraw may also be valued at a higher cash advance APR, which is why you should aim to never get a credit card advance.
However, this is an important feature to have in an emergency credit card, as unexpected expenses often require cash. When looking for no cash advance fee credit cards, read the card’s terms and conditions to see if it charges a high APR on cash advances. This is especially important because cash advances do not have a grace period, which means you are charged interest from the time you withdraw the money.
4. A 0% APR offer
There are many 0% APR credit cards that do not charge interest during an introductory period. It can range from 12 to 18 months. As long as you pay off your balance in full by the end of this period, you will not pay any interest on your purchases. These cards are ideal for covering unforeseen expenses and paying them off over time while avoiding interest.
That being said, these are introductory offers that expire after you’ve had the card for a while. You don’t want to open one if you don’t need to fund a purchase anytime soon. But if you’re currently facing an expense that you can’t afford, these are a good option.
5. No foreign transaction fees
If you travel abroad, you know that if anything can go wrong, it will happen. Having a credit card on hand for travel emergencies is a must. Unfortunately, many credit cards charge an overseas transaction fee of 3% on all transactions made overseas.
Frequent travelers can save money on fees by researching the best travel rewards credit cards. They usually offer lucrative rewards on travel expenses and don’t charge any overseas transaction fees.
If you follow these tips for finding a good emergency credit card, you can avoid high fees and make sure you never get stuck with no way to pay.