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Using Credit Cards for Emergency Funds
Posted on Tuesday, April 30th, 2024 | By IndusInd Bank
Using a credit card as an emergency fund has numerous benefits, including quick access to funds, flexible payment alternatives, and the opportunity to build credit history.
Emergencies can arise at any time, leaving you with a heap of unexpected expenses. In such challenging times, having a financial safety net becomes crucial for overcoming unexpected monetary hurdles. Traditionally, setting aside a percentage of your income in a savings account is considered a common method for establishing an emergency fund. However, in today’s unpredictable financial environment, others argue that credit cards could be relied upon as a valuable safety net.
Keep reading to gain an insight into what an emergency fund entails and how credit cards might help you prepare for an emergency.
What is an Emergency Fund?
An emergency fund functions as a safety net that can be used to deal with unexpected financial challenges. It is intended to cover essential living expenses such as unforeseen medical bills, or face an unplanned situation such as a job loss, car repairs, or a sudden home repair. An emergency fund allows you to navigate unexpected obstacles without compromising your financial stability.
How Does a Credit Card Help You During an Emergency?
The table below elucidates the benefits of using your credit card as an emergency fund:
| Quick Access to Funds | Enables you to address urgent financial needs promptly |
| Convenience in Critical Situations | Provides a quick and hassle-free way of making payments during emergencies, so you do not have to carry large sums of cash or look for ATMs |
| Flexible Payment Options | While it is important to make timely payments, you can pay the minimum amount due in times of a financial emergency |
| Builds Credit History | Responsible usage during an emergency can help create a solid credit history, which can be beneficial when applying for loans in the future |
| Security and Fraud Protection | Includes security measures for emergencies, like protection against unauthorised charges or, in case of card loss or theft |
Tips for Using a Credit Card in an Emergency
Here are some tips for using a credit card wisely during an emergency:
- Assign a Designated Emergency Credit Card: Reserve one credit card for emergency-related needs to avoid using it for unnecessary purchases.
- Understand Your Card’s Terms: Gain a comprehensive understanding of your credit card’s interest rate, credit limit, and any fees related to balance transfers or cash advances.
- Pay Off the Balance Promptly: Make an effort to clear your credit card debt as soon as possible to minimise accruing interest charges.
Last but not least, it is important to build an emergency fund that’s sufficient to cover three to six months’ worth of living expenses. This fund can help you handle unexpected expenses without accumulating credit card debt.
Apply For an IndusInd Bank Credit Card for Emergency Situations
Applying for an IndusInd Bank credit card can be a dependable way to navigate unforeseen financial challenges. Our selection of credit cards boasts best-in-class benefits, and the application process is 100% digital. Here are some compelling features and benefits of our credit cards:
- Reward points on every purchase and bonus reward points on hitting spending milestones
- Reward points can be redeemed or converted to cash
- Option of selecting from a range of credit cards with zero joining and annual fees
- Attractive cashback deals and offers on a range of purchases, including shopping, dining, groceries, flight bookings, movie tickets, and more
- Waived fuel surcharges at all petrol pumps across India
- Free airport lounge access at numerous domestic and international airports
Terms and Conditions Apply
Be prepared for unexpected expenses with an IndusInd Bank credit card. Apply online and enjoy the convenience and flexibility it offers during hard times!
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
