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The Pros & Cons of Using a Credit Card in Emergency Situations

A wise man once told me "life is what happens when you're busy making other plans."  Or maybe that's just a popular saying? In any event, unforeseen situations can spring up at any moment, and sometimes they force you to reach for your credit card at the least opportune times. While it's impossible to predict emergency situations before they happen, at the very least you can arm yourself with knowledge of the pros and cons of using your credit card to charge your way out of life's little mishaps. Here's a run-down of a common sticky situation, and how credit cards can and cannot help.

Emergency Car Maintenance

Let's say you're driving merrily down the highway, not a care in the world until all of the sudden your engine starts to sound like a dying rhinoceros.  You shut off your car just as black smoke begins to billow out your front end, and by that point you've put two and two together and determined there is something amiss in your car's engine. Unless you want to continue your car trip sans car, you'll have to shell out some pretty pennies to get your car back in working order.  Unfortunately, you're not sitting on a pile of emergency cash that can afford an engine replacement on the spot. The question now becomes, should you use one of your credit cards? Of course, you may not have much of a choice.  But there are some very important factors that you should consider before breaking out the plastic. For one, you need to take into account what your spending limit is. If the expense is going to take you to over 30% of your spending limit, you should remember that your credit score will likely take a hit. Another important factor to consider is your ability to pay your debt back.  Car repairs are usually pricey, so expect to pay a lot in extra interest if you plan to pay it back incrementally over a period of many months.  Of course, if you have a no interest credit card on hand at all times, you'll be in much better shape. If either of these factors apply to you, it's a good idea to try to pay as much of the repair as you can in cash before using your card. As always, there are always reasons why using a credit card in these situations can be advantageous to you.  If you have rewards cards, the repair payment could yield a serious chunk of miles towards your next free airline ticket.  And if you don't have a lengthy credit history, it can be a great opportunity to demonstrate your reliability to credit issuers and improve your FICO scores. In any event, we certainly hope that an emergency situation doesn’t happen to you anytime soon.  If it does, however, you'll at least have the knowledge necessary for making a wise decision on how to pay for it!

Photo credit: Shutterstock / koya979

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Logan Abbott's picture

Logan Abbott is a personal finance and credit card expert with over 5 years of experience writing about each topic. He is a graduate of the USC Marshall School of Business, and also contributes to other online finance publications. He has been quoted in the New York Times, San Diego Union Tribune, TheStreet, and more.

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Amy Lewis's picture


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