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We recently talked about the importance of creating an emergency fund. In that article, we mentioned the fact that it's nice to have a credit card on hand to use in unexpected situations. While you should focus on saving money on your own, there is nothing wrong with having extra backup when you need it most. That is what this article is all about.
We're going to explain the components that make up a good emergency credit card and provide suggestions for some of the best ones on the market. Heed our advice and you'll have plastic preparation unlike any other.
What to Look for in an Emergency Credit Card
Emergency credit cards aren't like other cards; you're not going to use them for everyday expenses, so you don't need to focus on rewards and perks. Here are some key features to keep in mind:
- No annual fee: You shouldn't have to pay money every year just to carry the card in your wallet.
- Low ATM fees: If your emergency requires you to get cash right away, you'll need a card that will affordably let you do so.
- Make sure it's a credit card, not a charge card- Charge cards require you to pay off the balance in 30 days. In the event of an expensive emergency you may need longer to pay off that balance.
- Low interest rate…sort of: You won't have to pay any interest if you don't use the card, but there may come a time when you have a huge balance to pay off. That is when you need to rely on a low APR to keep your cost down.
- Coverage- Look for things like Roadside Assistance, Zero Fraud Liability, Extended Warranty Protection, 24/7 Customer Service, and Travel Accident Insurance, to name a few.
- Quick approval: The time to start building your emergency fund is right now, so look for a card you can get as soon as possible. During the application process, see if you can get the card expedited.
- High spending limit: The more money you have available, the better prepared you will be for an emergency. Keep in mind though, credit lines are determined on a per-applicant-basis so you're not going to be able to search for credit cards with the highest credit line. If you pay your bills regularly though, you should request a credit line increase every 6-12 months.
Don't think about the bells and whistles. Just focus on the function of the card. Get the one that will best help you in a time of desperation and then you'll be prepared for whatever may come.
Best Emergency Cards From Our Partners
Citi Simplicity MasterCard: Considered one of the best low interest credit cards on the market, the Citi Simplicity has no annual fee, high balance options for those who qualify, and 0% introductory rate for 21 months. If you have an emergency pop-up in the next year and a half, you won't have to worry about interest on purchases or balance transfers. If you need a cash advance the APR is 13.24% - 23.24%* (variable), based on creditworthiness, and the fee is 5%. Good to excellent credit is required for this card, so feel free to apply if your credit is on the rise.
Discover It - Double Cash Back your first year: The Discover It card is the latest addition to a long history for this credit card company. It offers no annual fee, low APR, no over limit fee, no pay by phone fee, and 0% introductory APR for 12 months. The APR for a cash advance is pretty high at 25.24% (based on the market Prime Rate) and the fee is set at 5% or $10, whichever is greater. If you happen to lose your job, you may get a lower rate or lower payment to help you out; that's pretty prudent of Discover. This card also offers a fantastic rewards program, even though that won't matter much from an emergency perspective. If you decide that something else will work best for your backup card, this is still a great option to keep in your wallet.
Capital One® Platinum Prestige: The Capital One Platinum Prestige card is the most exclusive option in the Platinum line. You must have excellent/good credit to get approved, but once approved, you'll pay no annual fees and enjoy $0 Fraud Liability if card is lost or stolen. That means if your card gets lost or stolen, you're not responsible for the charges on it. There are a slew of other benefits associated with this card, like 0% intro APR and 24-hour roadside assistance. The APR that kicks in after the intro period is 10.9% - 18.9% variable. If you have poor credit, you may want to try the Capital One Platinum Card. *This offer and/or promotion may have since changed, expired, or is no longer available.
Simmons First VISA Platinum Card- One of the underdogs in the credit card space, this Simmons First credit card is great in the event of an emergency. The APR is perhaps the lowest in the market at 7.25% with no annual fee and no balance transfer fees. You can get a cash advance anywhere Visa is accepted at a rate of just 11.25% variable with a small fee of 3%, with the norm being about 4%. This card also comes with travel coverage and car rental coverage.
The Right Way to Use an Emergency Credit Card
In order to truly call something an "emergency credit card," you have to know how to use it. Keep the balance on the card clear at all times so you have the full balance to use when you need to. Make sure to check the expiration date every now and then, just to ensure the card is always valid. Keep the card with you at all times, even if you don't think you're going to need it. You might only be minutes away from an unexpected situation. On top of all that, see if you can get a second user on the card. Then you'll have a backup for your loved ones if your not near each other, just to be safe. Watch your credit and your account to make sure people haven't spent money on the card and you should be good to go. With the right card on hand and the right plan to use it, you should have no trouble getting through any emergency.
*Editorial Note: This content is not provided by Citibank. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by Citibank.
*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.