Credit Cards Are Not Your Emergency Fund, Here's Why!

Hey, I've got a question for you today.

Do you think your credit card is a good replacement for an emergency fund?

I'm going to answer that on today's show.

Hi there.

Welcome back to Financially Confident Christian.

This is your daily show where we really try to make you a more financially confident Christian.

And I'm Ralph, and I'm so happy that you're joining me today on the show.

Every day I try to give you just a little bit of financial wisdom to help you break that cycle of financial shame and, and do it with confidence.

And today I got a great listener question that says, ralph, I've always heard that having a credit card available is just as good as having an emergency fund.

That way I don't have to keep cash sitting around doing nothing.

Is there really a reason I shouldn't just rely on my credit card for emergencies?

Well, let me just tell you right now, that's a question I get all the time on this show, and it would seem rather intuitive.

If you've got a credit card, well, sure, just go ahead and use that as your emergency fund.

But here's the problem with that.

If you think about the moment that you need that emergency fund or why you would go and pull that credit card, let me give you an example of that.

Let's say all of a sudden, you're on your way to work, you're a little bit stressed.

You had had a long weekend, and you're getting your mind back on going to work, and all of a sudden you hear a bang.

The next thing you know, your car starts to drift.

Well, you realize right away you've got a blown tire, and you make it to the side of the road, no one was hurt, which is a beautiful thing.

But then you get out of the car and you look at your.

Your front passenger tire, and, man, that thing has been reduced to smithereens.

And you start thinking to yourself, wow, I'm going to have to get this fixed.

And then you start having that immediate terror of, well, how am I going to pay for this?

Now your initial reaction might be, well, you know what?

I've got this credit card.

I'm just going to go ahead and put it on that credit card because I'm sitting on the side of the road, I got to get this car fixed.

I got to get my way to work, because, hey, if I don't get to work, I can't make money.

But here's the problem with that.

Right now, you're in a very stressful time.

You're on the side of the road, something bad just happened to you.

It's, quote, an emergency.

And is this the right time to really create more debt for yourself?

Do you think using a credit card is a way to build security?

See, here's the thing I want you to understand.

Credit cards create debt by their very nature.

That's what they do.

They don't create security.

And if you're using a credit card for an emergency, what that means is you're borrowing at the highest interest rates around.

Listen, if you don't know anything else about finances, know this.

Credit cards are designed to make money for the credit card issuer, the banks, the credit card companies.

That's where they make money.

And if you're on the side of the road, you need that tire replaced.

Well, guess what?

You're borrowing money at the highest interest rate possible.

So that's my first big takeaway from this.

If you don't have that emergency fund, you're borrowing money, you're putting it on that credit card at the highest interest rate.

But here's a bigger problem.

You have this emergency right now.

Yes, you've got to get that tire fixed.

You got to get on your way to work.

But here's the problem.

If you use that credit card, you turn that debt into another crisis down the road.

Because, yes, you're facing that emergency now, but you're going to have that financial burden later.

I don't know how many people I've counseled over the years, listen, I've been doing this for 30 years.

I don't know how many times I've counseled people throughout my 30 years of experience.

And what they said to me is, ralph, you know, we.

We had an emergency situation.

We had to put a little bit of money on the credit card.

Well, now they're looking in the rearview mirror.

That was two years ago.

That emergency right now has created this financial burden that just goes on and on and on and on and on.

And here, let's go back to the first thing I mentioned.

You're borrowing at the highest interest rate, and now you're creating this financial burden.

And here's the problem.

Those interests compound quickly.

Even a small charge can take months.

Or as I said, this particular person I'm thinking about, they came to me, they sat down, they said, ralph, we had a really rough year.

My husband lost his job, and we had to pay a lot of our living expenses on a credit card.

I would say that's an emergency.

But now they've gotten years behind him.

If I remember correctly, this particular client two years.

And the interest was going up and up because in this particular case, the interest rate was in the plus 25% rate.

So you've borrowed at the highest possible interest rate.

You've created a financial burden not just for today, but for the future.

And that thing is just compounding on itself day after day.

So now you're thinking, Ralph, I guess that credit card as a financial emergency fund isn't such a great idea after all, is it?

And I'm going to say no.

Here's why.

I don't think that's a good plan.

If you really want true peace of mind.

I'm talking about financial peace of mind.

To be that financially confident Christian, you really want to think about cash because cash don't create bills for the future.

It doesn't create interest for the future.

And listen, the only lender involved is you and an emergency fund.

Here's the one, my big takeaway for today.

I want you to really embrace this.

An emergency fund is freedom.

Just think about that for a second.

That credit card is a shackle of debt.

I'm going to talk to you in a second about a great Bible verse that really nails this.

I'm going to end with today.

But an emergency fund, it's not enslaving you.

One of the big things I talk about on the show is how to break that cycle of financial shame.

Well, one of those cycles is getting stuck in that debt cycle, that recurring credit card debt cycle.

But an emergency fund truly is freedom.

It's your money.

It's ready to solve the problems without creating new ones, without creating that burden down the road.

Well, now let me share with you this verse from the Bible.

And if you've listened to my daily show, which I encourage you to do, you can see it@financiallyconfidentchristian.com this biblical principle comes right to us from Proverbs 22:7.

It says this.

The rich rule over the poor and the borrower is slave to the lender.

Just think about that for a second.

The rich, the banks.

And I'm not sitting here saying that all the banks are these greedy rich snobs.

That's not what I'm saying at all.

But what does this Bible verse say?

What does Proverbs 22:7 really tell us?

The rich rule over the poor.

But more importantly than that, the borrower is slave to the lender.

So if you want to break out of that financial slave or you want to break out of that cycle of financial shame, I'm going to encourage you right now, build that emergency fund.

Don't rely on that credit card.

It's just not the right answer for your long term financial success.

Well, how about we pray together?

Father God, we just thank you for your wisdom of the book of Proverbs.

And Lord, we ask that you would grant us peace and grant us strength to really work hard to build that emergency fund.

Lord, we see it as freedom.

And we know that the only true freedom we will ever have is, is freedom in you, Lord.

So today we ask you to just give us the courage, give us the tenacity to really save, Lord.

To really build that emergency fund, Lord.

So that when we get into that emergency situation, we don't have to worry.

We don't have to let that compound interest just build future burdens for us.

Because we know, Lord, you are the main reliever of burdens.

And I ask this in the precious name of Jesus.

Amen.

If you're interested in learning more about my daily show, you can go and see me@financiallyconfidentchristian.com I would love to see you there.

So God bless you and you have a great day today.