How to protect your credit against emergencies and the unexpected

Suppose you don’t maintain emergency savings and are affected by unforeseen situations. In that case, you’ll have to depend on credit cards, take out loans, or borrow money from your retirement savings account. This could put you in debt or leave you unable to save for your retirement.

In this article, I’ll discuss how to protect your credit using credit cards in case of emergencies. In a crisis, it’s acceptable to use a credit card as long as you have enough money to pay off the debt before it begins to accrue interest. Consider using a rewards credit card with a long interest-free introductory period. You can use credit cards in this manner to generate redeemable points or cashback benefits. Having a credit card with an initial interest-free repayment period can help you buy some time before you have to pay off the balance. A credit card can also be a safer alternative when leaving the house, such as a trip to the grocery store. It is far safer than carrying a large amount of money in your wallet.

But first, you need to determine how you can protect yourself from the sudden emergencies that may harm your credit.

How to protect your credit score from emergencies using different strategies

Keep an eye on your credit score

Once you’ve reached an arrangement, monitor your credit report to make sure lenders do not mark your accounts as late. Missed payments will take around a month to influence your credit score, so you must track them every month. You can use services like Credit Karma and Credit Sesame to set up a free monitoring system that will send you notifications about any recent activity on your credit report. Each of the three main credit bureaus also offers a free credit report once a year.

Keep track of the amount of credit you're utilizing

Using “too much” of your available credit will hurt your credit score, but the consequences aren’t permanent. The percentage of your available credit used is referred to as credit usage.

It affects your credit score significantly, and the less your use, the better. In normal circumstances, it’s recommended you maintain it below 30%, and even lower than 10% is preferable. Because you’re using more of your credit limit, which is a significant element in determining credit risk and credit scores, this is the case. When you use over 30% of your credit limit, your credit score suffers because credit card issuers see a higher risk that you won’t be able to pay it off in full or that it will take a long time to do so.

Even if you can make minimum timely payments, your existing credit card debt is another factor that will lower your credit scores. If your credit card balances are too high, use any emergency reserves you have to pay bills and buy necessities.

Never carry a credit balance

Carrying credit balances may add high-interest rates charged by most credit cards on amounts carried over from month to month. However, they will not charge you interest if you pay in full.

Carrying a debt implies paying interest at rates that can approach 20% per year. Carrying credit at that rate for an extended time can be pretty costly and can also impact your credit score.

Pay more than the bare minimum

When access to credit is essential, paying only the bare minimum puts your account in good standing. But remember, doing this won’t reduce your debts, rather it may increase your interest payment.

The minimum monthly payment on your credit card bill is usually a tiny portion of your balance, just enough to cover the last month’s interest and a small part of the principal. Paying the bare minimum won’t make a significant difference in your debt, and if it becomes a habit, you’ll be in debt for a long time, which is harmful to your credit.

What are some emergencies that can lead to unexpected expenses that might be put on a credit card?

Choosing credit cards for unexpected needs could be detrimental to your budget and credit score. So identify these unexpected situations that may push you towards using credit cards and incur credit card debt.

Sudden job loss - It is the most common reason for having an emergency fund, and with good reason. If you don’t get paid regularly, you’ll need a cash reserve to pay for necessities. The previous rule of thumb was to have three to six months’ worth of expenses in your savings account. However, with the average period of unemployment being around 40 weeks, you’ll want to set aside more money.

Significant medical bills - This might be a significant reason if you don’t have health insurance. A trip to the emergency room could put you in considerable financial trouble. Even if you have insurance and need surgery, for example, you’ll still have to pay the deductible and co-payments outlined in your policy.

Major dental costs - If you don’t have dental insurance, dental costs can create a hole in your wallet. If you are using credit cards, the impact might become severe. You might think about borrowing money from parents or asking friends to provide the funds. But not everyone should rely on others for paying their dental bills.

With home repairs, homeowner’s insurance covers the biggest expenses. But, if your deductible is high, can you come up with the money to cover it? Plus, when you buy a home, insurance wouldn’t pay for everything. Eventually, it requires you to spend a lot of money.

For example, if you have to replace your home’s crumbling balcony, which might cost you approximately $5,000, insurance only covers a portion of the costs.

Car repair expenses - Car repair costs are a headache. If you think you’ll use your credit cards to pay for your sudden car repair expenses, think again. It will be easier to pay for car repairs in your local auto repair shop, where they know you, and they might give you a specific discount on repair charges or spare auto parts. But what if your car breaks down in other locations, far from your home?

If you need to repair a car at a new shop, they might charge you more than your local shop, and they might not accept credit cards. But if they do, that car repair expense may cost you a sizable amount of money.

Unplanned gifts - A family wedding also necessitates the purchase of a wedding present. From baby showers to retirement celebrations, gifts are expected for various other occasions. When a coworker has a significant life event, it’s the usual tradition at specific workplaces to start a collection for a collective present. Even if you donate $5 or $10 each time, it adds up.

Wedding gifts, in particular, can be rather costly. The typical wedding guest spends $99 on a gift for a friend’s wedding and $127 on a present for a relative’s wedding. And the generosity doesn’t end there. Most bridal shower guests said they spent at least $50 on a shower present in addition to the wedding gift.

Unplanned travel - A death in the family may cause you to need an expensive last-minute plane ticket to attend the funeral. If you have enough cash in your account to pay your charge immediately, you won’t have to worry about it. But if you don’t have that much money, you might have to bear this significant expense by using credit cards and accumulating interest later.

Emergency pet care - You might be able to afford the monthly costs of maintaining a pet, but you might not be able to afford emergency pet care. If your cat or dog needs surgery, can you pay thousands of dollars in pet care bills and pay them off in cash? Most of you will answer NO. So, you might have to use credit cards to pay those bills.

Expenses of funerals - Many funerals exceed $10,000. If your loved one had life insurance, the benefits you receive might be enough to cover the cost, but you may have to wait months to collect the money. In the meantime, you’ll have to use a credit card to make payments for those bills.

What should you do if you miss a credit card or other bill payment?

Pay the bill right away

If possible, go online or call your credit card company right away and make a payment. The sooner you pay off your late bill amount (or at least make the minimum payment), the less likely you are to face penalties such as further late fees, interest costs, or damage to your credit score. If you pay your bill promptly when it is due, your delinquent payment will not reflect on your credit reports (this occurs once you are at least 30 days past due).

Request a fee waiver

If you miss a payment, your credit company will probably charge you a late fee. These usually cost between $25 and $40. If you contact the card issuer’s customer service number and explain that this is your first late payment, you might be able to convince them to forgive the late fee. While it is not guaranteed to succeed, many credit card companies will eliminate late fees as a kindness to loyal customers once in a while.

Set up automatic payments

After a late payment issue, you should set up automated payments from your checking account on payday. This will help you with any future deadlines. Automating your payments is the greatest approach to avoid missing payments. Set it up so that your credit card is paid on a specified day of the month, along with other utilities, rent, internet, etc.


Apart from DIY credit management methods, do not hesitate if you need professional help to manage your credit card debts and other credit liabilities. A professional credit counseling agency can help you manage your credit, evaluate your financial condition and suggest a suitable repayment plan. They will also help you choose effective debt relief strategies such as credit card consolidation or payday loan consolidation.

  • expertise badge
  • TrustLink logoTrustLink logo
  • Customer ratings on BBB
  • IAPDA logo
  • Calchamber Member
  • Calbar Registered
  • D&B
  • Trustpilot
  • yelp logo