What circumstances constitute an emergency for you?
The husband and I try to categorize our spending, like paying for cash for everything else and only using the credit card for emergencies. What would emergencies mean for us? These would be hospitalizations, unexpected school expenses and death. However, we set aside about 50% of its credit limit to big purchases â€“ and we snag them whenever there would be a 0% installment rate offered at malls, known as best credit card deals. We really think over it because we cannot get another big ticket item not unless the one we got is fully paid. So we usually just end up paying for it in cash. We really try to make sure our citibank credit cards maintain their good credit standing.
However, it is not too wise to charge every emergency to the credit card, since you might not be able to pay for it in full when it is due and this is where credit card interests, which are huge, kick in. It can become a potentially big problem if one does not know how to manage business credit cards. The point is, make sure that there is actual cash for emergencies and save the big ticket purchases when there is almost half of the amount in your savings.