If your wallet is full of rewards credit cards, you may not have the right type of card when an emergency strikes.
U.S. News and World Report credit card expert and consumer finance analyst Beverly Harzog told Clark.com that she always carries one credit card with a very low interest rate. These cards typically don’t offer cash back or travel rewards.
Why You Need a Low-Interest Credit Card in Your Wallet
Even with an emergency savings fund in place, a low-interest card came in handy for Beverly a couple of years ago when she had two children away at college and needed to replace her roof:
“Thank goodness I did have an emergency fund, but I used my emergency credit card to get through two months. I paid interest, very low interest for two months. I did that because I knew I could pay it off if I just had a little more time.”
A credit card with a low interest rate could also provide a short-term loan for other emergency expenses like medical bills and car repairs.
So, what exactly qualifies as a low-interest rate card? Beverly has had a 9.99% APR card for 20 years. That’s a very good rate. The average APR is currently around 15%, according to the Federal Reserve.
Clark.com credit card expert Jason Steele said the Unify Variable Rate Visa, starting at 7.99% APR, has the lowest rate he’s seen.
Although Beverly keeps a low-interest credit card for emergencies, she uses it at least once a month for a small purchase. That way, she doesn’t worry about the credit card issuer closing the account for inactivity.
Do you have a low-interest credit card for emergencies? Comment below and let us know about the credit card you use!