Comments on: I don’t need an emergency fund, I have a credit card

By: squegie

squegie — Tue, 18 Nov 2008 05:04:21 +0000

I just started reading this blog, so I’m cashing in on this entry 10 months later, but I wanted to mention money-market accounts. These accounts are FDIC insured, currently yielding around 3% or more, and allow 3-6 withdraws per month (only 3 checks per month). That is my emergency fund. I could essentially fix my car, my furnace, and my car again by writing checks from my MMA emergency fund. GMAC and EverBank seem to be the leaders on bankrate.com.

By: lulugal11

lulugal11 — Tue, 29 Jan 2008 14:20:42 +0000

This was very well written and is a good devil’s advocate post for not having the emergency fund as so many bloggers talk about.

I started trying to have one but since I have credit card debt (and a few real emergencies) it has gone down.

Now I simply put in around $5 a month to it and pay more on the credit cards because I would end up using my credit cards in an emergency anyway.

By: Brooke (Dollar Frugal)

Brooke (Dollar Frugal) — Tue, 15 Jan 2008 11:41:40 +0000

I never thought of it this way…I just wanted credit cards out of my life. Now (7 years later), I’m more mature and could handle myself better. That $10k emergency fund could be much better used to pay down my mortgage…good call. Now, to get DH to agree…

By: Amanda @ Me vs Debt

Amanda @ Me vs Debt — Tue, 15 Jan 2008 11:39:49 +0000

I don’t know, money in a savings account is an emergency fund in my book. I also use a credit card to cover the immediate expense. That way I can take advantage of rewards plus gain interest during the grace period. The only money I keep in my (interest yielding) checking account is the money budgeted for specific bills during a given pay period. Whatever you call it, its smart to have funds you can access fairly quickly — in at least enough time to pay your credit card bill — in case of emergency.

By: Jacob

Jacob — Tue, 15 Jan 2008 01:28:10 +0000

@ jen - having the money somewhere without direct access can be risky in case the money is needed “right now”. Otherwise that’s the way I carry cash, but I wouldn’t do it that way without a credit card.

By: traineeinvestor

traineeinvestor — Tue, 15 Jan 2008 01:08:37 +0000

A good post. I totally agree. If you have the ability to carry the risk from other sources (e.g. liquid assets, credit facilities), then an emergency fund is wasteful.

By: Debbie M

Debbie M — Mon, 14 Jan 2008 22:00:52 +0000

You may or may not be “likely” to put things other than emergencies on your card, just as you may or may not be likely to use an emergency fund for non-emergencies.

Anything you do to reduce temptation is a good idea, but that sounds like a different blog entry.

By: Moneymonk

Moneymonk — Mon, 14 Jan 2008 21:24:18 +0000

It seems like you’re very good with math. You analyze everything.

However, you forgot risk. With an cash emergency fund, You pay for the emergency and that’s it.

With a credit card, you are likely put things other than emergencies on your card, Making the balance swell and harder to pay off

By: jen

jen — Mon, 14 Jan 2008 21:01:38 +0000

I think when people say “emergency fund” they don’t mean sitting in checking. Almost everyone has them in high yeild savings, or some in brokerage accounts that are stable values.