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Question 15

Credit cards are a convenient backup but can be expensive if used as a primary emergency funding source. High APRs, potential fees, and the risk of rising balances make cards a costly option for prolonged cash needs. Emergency funds provide interest-free liquidity and avoid creating debt that must be repaid with interest. Smart planning recognizes that both emergency savings and minimizing credit-card use are important to protect cash flow and net worth.

Which statement is true about relying on credit cards for emergencies versus having an emergency fund?

Did You Also Know...

By Wise Wallet

Where you hold your money matters—deposits at insured institutions have protection up to standard insurance limits.