Savings Account Vs. Credit Cards – Which One Do You Rely On?
November 11, 2009 | Posted by Brad Chaffee 
In a country where the average savings rate per household has been low to negative, it is not uncommon to hear someone refer to using their credit card(s) for emergencies. Do you use your cards for “emergencies”?
I am going to be honest and just say it. That is poppycock! If you had that credit card just for emergencies, why then would you use your emergency backup to go shopping? Is shopping an emergency? Filling the gas tank up? Getting that high-priced morning coffee?
Get a savings account for emergencies and stop lying to yourself. You have that credit card for instant gratification and nothing else. Yes you may be FORCED to use that card for emergencies from time to time because you do not have a real emergency fund, but that alone does not make it your rainy day fund.
What constitutes an Emergency Fund? It is exactly what it sounds like. An account or “secret stash” set aside to be used in case of an E-M-E-R-G-E-N-C-Y. This means you do not touch it unless you do not have any other options. It is to be used as a last resort, in an effort to keep you from going into debt.
So with that said, a credit card cannot possibly be used as an emergency fund. Using your credit card for emergencies defeats the purpose to begin with. You are going into debt to handle life’s little, or not so little problems. Using a system that sets you up for debt doesn’t sound like a very smart system at all. Get a new system.
What does that mean? It means you should be giving it your all to be more self-reliant by saving an emergency fund, so that you can rely on yourself, as opposed to debt—to get you through the tough times. Furthermore, you should be a good example for your children financially. I know I do not want my children struggling the same way I have. Teach them right.
It is well worth it, and it reduces stress because using your own money to fix something is better than using high-priced credit cards.
The problem with using someone else’s, is that you never truly resolved your original problem. You just made it bigger and decided to worry about it later. Not a good idea!
Think smart! Think self-reliance! Get yourself an emergency fund for emergencies and kill that credit card like I did. You won’t regret it! 
photo credit
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Brad Chaffee is the Enemy of Debt, and a regular contributor here at the Self Reliance Exchange. Brad has also become debt free by paying off $26,076.75 in just 20 months. Learn more about Brad by reading his bio. You may also contact him here.
Categories: personal finance | 
Tags: credit cards, emergency fund, savings, self reliance | 
1 Comment »
Brad:
You’ve got this one nailed right on the head! People need to realize that a credit card is only meant to be a convenient way of paying for something. It isn’t a way to give yourself a loan. Nevertheless, that’s how many people use their credit cards.
Credit cards let the financially irresponsible be their own personal loan officer, and that is the start of long lasting trouble. Many people find that what was once a convenient payment method quickly becomes a way to extend themselves a loan, and ultimately turns into a ball and chain around their neck.
This is largely what the credit card companies want – financial slaves. And, they count on us to place ourselves in that position. Many of us gladly do just that. It’s financial insanity.
Clair