Your emergency fund is empty. You don’t even have enough money in the account to pay for a large coffee, let alone enough money to cover an urgent plumber’s bill or appliance replacement. You can’t rely on this fund right now, even though you desperately need to use it.
Can you use credit instead? Technically, yes. These are some credit options that you could turn to in an emergency.
Credit Card
The average American has 3 credit cards tucked inside of their wallet. So, you likely have a few cards that you can turn to when an urgent expense falls right into your lap!
With the help of a credit card, you can resolve the emergency quickly by borrowing temporary funds from the card’s line of credit. All you have to do is charge the expense to the card and add it to your outstanding balance. Do your best to pay down your outstanding balance by the next billing cycle to avoid the accumulation of interest.
You should only turn to this solution when your credit card’s balance is far from the limit. If that balance is dangerously close to the set credit limit, you don’t want to add another transaction that will push it toward that boundary. Doing this will make it harder to cover your upcoming credit card bills and put you at risk of maxing out your card. Don’t solve an emergency now by giving yourself another emergency later.
Ideally, choose the credit card in your wallet with the lowest balance and the lowest annual percentage rate. This should make repayment much easier for you.
Credit Card Cash Advance
Your credit card also provides another borrowing option: a cash advance. A cash advance is a withdrawal of cash from your credit card’s account — as long as the withdrawal is within the credit card’s limit.
A credit card’s cash advance is treated a little differently than a regular credit card charge. A cash advance will come with a cash advance fee — this is often 5% of the withdrawal amount. And your withdrawal will collect interest almost immediately. You will not have the grace period that you are usually granted with your credit card transactions. So, this will mean that you will want to start repaying what you borrowed as soon as possible. You do not want to wait for too much interest to accrue.
Personal Loan
Another option that you can turn to in an emergency is a personal loan. With an approved personal loan, you could use borrowed funds to cover your expense in a short amount of time and then follow a straightforward repayment plan afterward.
Where can you apply? You can look into cash loans online through CreditFresh and see whether you’re eligible to submit a request for a loan there. That’s right — you don’t have to set up an appointment at your nearest bank branch. You can submit your online loan application and learn about your approval results at home. It’s quick and convenient.
This option will only be available to you if you meet all of the eligibility requirements of the provider. What are some requirements you should expect to see?
- You must be of legal age of contract in your state
- You must have a consistent stream of income
- You must be a U.S. citizen or be a permanent resident
- You must have an active bank account
Sometimes, you can’t handle an emergency expense with your savings. In those cases, you can turn to one of these credit options for help.
