Should You Use a Credit Card for Emergencies?

Unexpected expenses can arise at any time—car repairs, medical bills, or home maintenance issues can throw off even the most carefully planned budgets. While turning to a credit card may seem like the easiest solution, financial experts caution against using this as a primary method of covering emergency expenses.

High interest rates and long-term debt can make a one-time expense significantly more costly over time. Instead, it’s important to explore smarter financial strategies to handle sudden costs while maintaining financial stability.

Why Credit Cards Should Be a Last Resort

Freepik | shurkin_son | Credit cards offer quick relief, but unpaid balances create long-term debt.

Using a credit card for emergencies might provide immediate relief, but if the balance isn’t paid off quickly, it can turn into a long-term financial burden. The average credit card interest rate is currently around 20%, which means any unpaid balance accrues high-interest charges, making the expense much costlier than the original amount.

For example, if an essential home repair costs $600 and is charged to a credit card with a 20% interest rate, failing to pay off the balance immediately could result in an extra $10 in interest after just one month. If only the minimum payment is made, it could take years to clear the balance—costing hundreds more in interest.

Who Relies on Credit Cards for Emergencies?

Many people who use credit cards for unexpected costs do so because they lack sufficient savings. However, this isn’t always due to poor financial habits. Younger individuals, for example, may not have had the time to build an emergency fund.

According to recent data, younger generations are more likely to rely on credit cards in emergencies:

1. Gen Z (ages 18-28) – 27% finance emergencies with a credit card
2. Millennials (ages 29-44) – 25% use credit cards for unexpected expenses
3. Gen X (ages 45-60) – 25% also turn to credit cards
4. Baby Boomers (ages 61-79) – Only 21% rely on credit cards for emergencies

With the rising cost of living, it’s not surprising that fewer young adults have the savings needed for emergencies. However, experts strongly recommend working toward building a financial cushion to avoid long-term debt.

Building an Emergency Fund

Freepik | jcomp | Saving for emergencies can feel daunting, but small steps make it achievable.

Saving for unexpected expenses might seem overwhelming, but starting with small, manageable steps can make it more achievable. Instead of aiming for a full emergency fund immediately, financial advisors suggest breaking the goal into stages:

1. Start Small

Begin by saving a manageable amount each month, even if it’s just $25 or $50. Over time, these small contributions will add up and create a financial cushion.

Alternatives to Credit Cards for Emergency Expenses

If an emergency arises before savings are fully built up, there are still ways to handle it without resorting to high-interest credit card debt:

1. Negotiate Payment Plans – Many medical providers and service companies offer payment plans with little or no interest.
2. Explore Low-Interest Loans – A personal loan or a line of credit from a bank may offer lower interest rates than credit cards.
3. Use a 0% APR Balance Transfer Card – Some credit cards offer promotional periods with no interest, allowing time to pay off the expense without extra costs—but only if used strategically.

Unexpected expenses are an inevitable part of life, but how they’re handled can make a huge difference in long-term financial health. While credit cards can provide temporary relief, they should not be the go-to solution for emergencies. Instead, focusing on building an emergency fund and exploring alternative payment methods can help avoid unnecessary debt and financial stress.

Taking small steps toward financial preparedness today can provide peace of mind and stability for the future.