Does a credit card make a good emergency fund?

For the last few weeks we’ve been talking about the importance of knowing what your “need to pay” expenses are and how the total of those needs is a good place to start when building an emergency fund.

This week we’re talking about a mistake a lot of people make with their emergency fund – thinking they don’t need one because they have a credit card.

It’s true that you can fall back on a credit card to pay for emergencies. But a Visa or American Express is no substitute for cash. Using a credit card to pay for unexpected expenses has some real drawbacks that will probably cost you in the long run. Check out the short explainer video here to understand the actual cost of using a credit card as an emergency fund (it’s probably a lot more than the cost of the emergency itself.)