"For Emergency Use"

Ever heard of this phrase: "for emergency use"?

No, I am not referring to that red signage posted on building walls and in most cases situated beside a fire extinguisher. Let me help you refresh your memories. We always hear this phrase uttered by some friends, acquaintances, relative, or even yourself. Can you now relate on somebody relies on their credit cards as emergency funds?

In some instances this beautiful phrase is also used as a sales pitch by an agent offering credit cards. Just like a couple of weeks ago, an agent of one of the international banks here in the UAE called me up and informed me that I am privileged enough to have a pre-approved credit card. As I declined the offer, he uttered this sweet phrase and further added that nothing will be lost with me and everything is to my advantage. I countered him by asking: (a) what type of emergency are you referring to?; (b) why and how in the world could a credit card be the best source for emergency funds?; and (c) cite a real life scenario where a person who is in an emergency situation is being saved by his credit card.

Having failed to satisfy my rebuttal questions, he rested his case. That sales pitch did not produce any sales at all.

For those cardholders who believe that their credit card(s) are a great help in times of emergency situations, I am warning you, that you are in a very dangerous situation. You are no different from a suicide bomber. You are in the belief that what you are carrying is for a noble cause, not counting that your life is more precious than that alleged noble cause. No matter how noble you may think it seems, you will still be killed alive by the usurious interests and charges associated with your credit card, especially when you are paying the minimum amount due.

Reliance on the credit card as an emergency fund is a serious mistake. There really is no substitute for setting aside some actual emergency funds out of your income--be it from slary or from any other source--to answer any emergency needs one might have in the future.

How to do this? You may avail the services of a professional or you can do it your own. You can purchase an insurance or any other instrument from reputable insurance companies or do some self-insurance, by setting aside funds just for emergency purposes. Either way is incomparable to reliance on credit cards.

N.B. after having received an overwhelming response from my personal contacts and some visitors of this site with thier comments and pm's sent, i am encouraged to write a personal finance article on a weekly basis, instead of the planned fortnightly publication. i will try my best to publish this one weekly (every sunday or monday of the week.) personal thanks to Randel, one of my online buddies, whose blog also inspired me and my WIN - Al Ain family for the support. If you find my personal finance articles useful, please share this to your friends or let them visit this site regularly. God bless.