A large number of people across the world prefer to use credit cards for making payments these days. However, having a credit card does not mean that you use it for regular payments and big purchases whenever needed. It is a useful financial product when you are facing a financial crunch. We all know that emergencies can strike at any moment, catching us off guard and putting a strain on our finances.

Situations like medical emergencies, sudden home repairs, or unexpected travel expenses can immediately require funds we may not be able to arrange on time. That is why, having a credit card can be a game-changer.

Health Emergency

A sudden health crisis may require immediate hospitalization. In that case it is essential to evaluate the urgency and necessity of the expense. In critical situations like medical emergencies, using a credit card for hospital bills or medication might be unavoidable. However, you must ensure to repay the borrowed amount on time.

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Travel Requirement

Suppose you need to travel due to an unforeseen travel requirement for a family emergency. In this scenario, you must first understand your credit card’s features related to travel. For instance, some cards offer discounts on flight tickets and hotels. Utilising these benefits can significantly reduce expenses during unplanned travels, reducing financial burden.

Adhil Shetty, CEO, Bankbazaar.com, says, “During emergency travel needs, credit cards’ travel benefits become crucial. They often include expedited booking for flights and hotels, access to emergency assistance services for unexpected situations like trip cancellations or medical emergencies abroad.”

Vehicle Breakdown

Suppose, you come across a situation where you are required to get your vehicle repaired due to a breakdown. What will you do? The best thing would be to set a budget considering the required repairs and your ability to repay.

If you don’t have ready funds, you can make use of your credit card and pay the repair cost via your card. However, you must be sure that the payment you have made can be repaid without any financial stress whenever your card bill is due. Having a clear plan for repayment within a feasible time-frame can ease financial stress.

Home Renovation or Repair

Suppose your house needs repair due to a natural disaster or your house is aged. Here credit cards can be useful to help you arrange funds. However, you must compare interest rates among different credit cards. Choose cards offering lower interest rates for the specific period to minimize the overall cost of borrowing during the emergency.

Job Loss

In case there is an unforeseen job loss leading to temporary financial strain, your credit card can help you sustain for a few months. But you must not go overboard as it is just a temporary cash available for a limited time period and you should have a repayment plan ready to avoid a debt trap. Ideally, one should rely on an emergency fund in these situations but, if unavailable, consider using a credit card cautiously, focusing on essential expenses and creating a plan for repayment once income stabilises.

Immediate Educational Expenses

Commit to repaying the credit card debt promptly. Timely payments prevent additional interest charges and protect your credit score, which is crucial for future financial stability.

Avoid Cash Withdrawals

When a financial emergency strikes, you must not lose your cool. Refrain from using credit cards for cash withdrawals as they often attract high fees and immediate interest charges. Explore other avenues for obtaining cash first. And if you are opting for this option, it has to be only for a limited period, and you must repay the same on time.

Credit Card debt

If you have accumulated credit card debt due to prolonged financial hardships, you may identify a card, based on your eligibility, with a favourable balance transfer offer. Once approved, initiate the transfer, consolidating multiple debts into one manageable payment. By doing so, you may benefit from a lower interest rate during the introductory period, allowing you to focus on repaying the principal amount without accruing additional interest charges.

Shetty, adds, “A credit card proves invaluable during various types of emergencies, whether for unexpected medical expenses or urgent funds needed for home renovations. Its features such as interest-free periods, reward points, and other benefits aid in cost reduction and fulfilling immediate financial needs. However, you must understand that the repayment plan is crucial to avert the accumulation of long-term debt when you swipe your card for a larger amount.”

It is essential to understand that the goal is not to avoid using credit cards altogether during emergencies but to use them wisely, ensuring financial stability in hard times.