When an emergency hits and you need money, swiping a credit card isn’t ideal — but it may be necessary.
In a perfect world, you’d have a robust emergency fund to draw from in these situations. But in the event that you don’t have enough cash to cover an unforeseen expense, an emergency credit card can come in handy. Even if you can cover an expense with your savings, it can take several days to transfer money out of a savings account. This is why it’s smart to keep a credit card on hand for emergencies.
By researching the best credit cards and keeping an eye out for the following important features, you can find the perfect emergency credit card — one that’s convenient to use on the fly and has minimal fees.
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1. Low APR
Arguably the most important feature of any credit card is its interest rate, as this is what you’re paying to borrow money. This is certainly true if you plan to carry a balance, as a high interest rate can make even a moderate credit card balance difficult to pay off.
The best low interest credit cards charge an APR that’s well below the national average of close to 17%. A good APR for a credit card is anything below 14%, but you’ll have to have good credit to qualify. Some credit unions may even offer credit cards with an APR well below 10% to their most creditworthy members. When you’re looking for a credit card for emergencies, prioritize these types of cards in case you end up having to charge a significant amount and pay it off over time.
2. No annual fee
Lots of credit cards charge an annual membership fee in exchange for additional perks and rewards. However, if you’re getting a credit card for emergencies, you probably don’t plan on using it often enough to earn big rewards. In that case, paying an annual fee isn’t justified.
Luckily, there are plenty of no-annual-fee credit cards to choose from, and some of them even offer rewards. You’ll still want to prioritize cards with low interest rates, but you can find plenty of those with no annual fee.
3. No cash advance fee (and a low cash advance APR)
Most credit cards let you do a cash advance, which consists of withdrawing cash from your credit card at an ATM. Unfortunately, cash advances tend to incur fees of 3% to 5% of the amount withdrawn. The money you withdraw might also be assessed a higher cash advance APR, which is why you should aim to never get a credit card advance.
However, this is an important feature to have in an emergency credit card, as unexpected expenses often require cash. When looking for credit cards with no cash advance fees, read the card’s terms and conditions to see if it charges an elevated APR on cash advances. This is especially important because cash advances have no grace period, meaning you’re charged interest starting from the moment you withdraw cash.
4. A 0% intro APR offer
There are plenty of 0% intro APR credit cards that don’t charge interest for an introductory period. This could be anywhere from 12 to 18 months. As long as you pay off your balance in full before that period ends, you won’t pay any interest on your purchases. These cards are great for covering unexpected expenses and paying them off over time while avoiding interest.
That being said, these are introductory offers that expire after you’ve had the card for a certain period of time. You don’t want to open one of these if you don’t need to finance a purchase any time soon. But if you are currently facing an expense you can’t afford, these are a good option.
5. No foreign transaction fees
If you travel abroad at all, you know that if something can go wrong, it will. Having a credit card on hand for emergencies while traveling is a must. Unfortunately, many credit cards charge a foreign transaction fee of 3% on all transactions made overseas.
Frequent travelers can save money on fees by looking for the best travel rewards credit cards. They typically offer lucrative rewards on travel spending and don’t charge foreign transaction fees.
If you follow these tips for finding a good emergency credit card, you can avoid expensive fees and make sure you never get stuck with no way to pay.
View more information: https://www.fool.com/the-ascent/credit-cards/articles/5-things-to-look-for-in-a-credit-card-for-emergencies/