Is having credit for a rainy day a good idea?
If you think of using credit cards as a way to deal with unexpected emergencies in life, think again. I think Mark Twain’s quote written above sums it all up nicely. Bankers as well as Credit card companies are interested in charging you interest on the money they loan you. They are not concerned about life emergencies you may be facing.
Credit cards and Emergencies
If you can’t pay your credit card bill, your credit card company is likely to prevent you from using your credit card, even if you are on your death bed. Not only they will not let use the card, they may also lower your credit limit and raise your interest rate. The reality of the situation is that creditors have done an outstanding marketing job and have been able to convince us that credit cards are a necessary part of life. It turns out that the oppoiste is true, especially during emergencies. Consider the following: Do you rather face an emergency with debt or free of debt? Is it better to rely on a credit card company to address life emergencies or is to better to face life emergencies debt free? Would you borrow from someone who is likely to sue you if you don’t pay them back regardless of your life circumstances?
Instead of relying on a lender to help out during life emergencies, it makes much more sense to carry adequate insurance and enough money saved up to pay for your insurance co-pays.This way, when you are facing an unexpected life emergency, you have insurance and enough money to pay the co-pay.
Of course, this is a simplistic description of what goes on in real life and you can’t have insurance for everything, but incurring debt to overcome life emergencies does not seem to be the best solution.
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