Should a Credit Card be Used for Emergencies?
A friend of mine needed cash… it was a large sum of cash to close on a real estate deal he had set up. He went to his bank and asked for $15,000 and expected the bank teller to go to the vault and pull out $15,000 in cash to take with him. No Dice! They said he could have $2,000. He asked how long it would take to get $15,000 and they said if he requested the funds on a Monday, they should be able to have it by Friday!
What does this really mean? Obviously the banks do not have cash in their cash drawers and even in their vaults for large cash withdrawals. So, what should happen if a dozen or so people tried to close their accounts on the same day? What about 100 or 1000?
I suppose it is obvious that the bank would have to shut it’s doors and if that happens, what are you going to do to pay the bills until the bank can sort out the problems and have your accounts and cash available to distribute?
What could cause something like this? Well, any number of things and they don’t have to be all that sinister or doomsday… it just has to be a problem that becomes your problem whether you want to close your account or just get some cash to pay the bills…
As I was pondering this problem… I realized there are some back up alternatives to having your bank shut it’s doors because of weather, power failure, terror attack or a run on the money… Be sure to have a credit card with another bank, perhaps an out of state or national bank available with a large limit and low or no balance. This would require you to get that debt paid down or off and have it available. I know it’s a novel concept but think about it…
Worse case scenario… weather has shut down the bank and electricity is down… you could drive to another state where weather is not so bad and using your credit card, get groceries, a place to stay, even pay bills, etc. You can even get a cash advance if you needed cash and when the bank is back open, you can pay off the credit card just like you were paying your bills normally.
I know it sounds simple… but did you ever think about it before? So, the solution is to get your credit cards paid off and available cause you never know when you will need an emergency source of payment or cash…
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I hope it never happens, but… prepare for the worst and live for the best!
Lawrence M Law
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