Should a Credit Card Serve as Your Emergency Fund?
- Credit card debt can balloon quickly, thanks to high interest rates and low minimum payments.
- A card issuer could cancel or cut your credit limit if you don’t use your card enough.
- Build an emergency fund by opening a high-yield savings account, automating contributions, and saving a portion of any extra cash that comes your way.
Unplanned bills and emergency expenses are an unfortunate fact of life for all of us.
You could face medical bills for an ER visit your insurance doesn’t fully cover. Or your car’s transmission could break down on your way to work one day. Maybe the ice on your roof during a particularly brutal winter will lead to a ceiling leak. Life is full of surprises, and many of them are expensive.
A credit card is often an easy way to handle unplanned costs. But it’s a bad idea to make a credit card your designated emergency fund. Here’s why.
Why You Shouldn’t Rely on a Credit Card for Emergencies
Credit cards aren’t great as an emergency fund, for several big reasons.
Credit card debt can balloon fast
Credit card debt is one of the more insidious types of debt. It can quickly spiral out of control. The average interest rate on a credit card as of spring 2025 is over 21%. Unlike interest on most other types of loans, credit card interest is charged daily. Extremely low minimum payments make it possible to drag even a small amount of credit card debt out for decades.
Relying on a credit card for emergency expenses you can’t quickly pay off can lead to the need for credit card debt relief. If you use a big chunk of your credit on your surprise expense, you could accrue huge interest charges, and watch your debt balloon every day you carry your balance forward past your credit card’s grace period.
Maxing out a card can hit your credit hard
If your unplanned expense is big enough and your credit limit low enough, you could max out the card. This is bad news for your credit score. Credit utilization (how much of your available credit you’re using) is a major credit score factor.
An unused card could be canceled or have its credit limit cut
You might assume that getting a credit card, putting it in a drawer, and never using it makes you a great customer who’s financially smart. The latter half is correct, but since credit card issuers make money when you use the card and carry balances, they aren’t always big fans of customers who let their cards sit unused.
Card issuers don’t have to give you advance notice to close your account or cut your credit limit due to inactivity. You could find yourself with an unplanned bill and insufficient credit to cover it—or no credit at all.
How Can You Build an Emergency Fund?
It’s overwhelming to think about putting aside the recommended three to six months’ worth of expenses, especially while you’re paying off debt. Take a deep breath—you can get to a solid emergency fund over time by taking little steps like these.
Open a high-yield savings account
Online banks often pay more interest on your savings than brick-and-mortar banks. Open your emergency fund at an online bank and enjoy the interest you earn (free money!). Just be sure to use an FDIC-insured bank or NCUA-insured credit union, so your money is safe.
Automate your contributions
Set up automatic transfers of cash from your checking to your emergency fund account. If you key it to when you get paid, the money will leave before you have a chance to miss it.
Pro tip: You can have accounts at multiple banks. Setting up inter-bank transfers is easy!
Save a portion of “found money”
Unplanned windfalls are a lot more fun than unplanned bills, and they can help you prepare for emergencies. If you get a bonus at work, a tax refund, cash gifts, or another windfall, bank at least part of it.
Trim your expenses, if possible
If you’re already living paycheck-to-paycheck, it’s hard to cut even more out of your budget. Even so, comb through your expenses to find any that you could do without. Get rid of a $20/month streaming service that you rarely watch. If you’re paying $8.95 for your checking account, switch to a bank that offers free accounts. Those are dollars you could send to your emergency fund.
Clean out your closets
How long has it been since you went through your belongings and did some weeding? Selling those clothes you never wear or those knick-knacks lurking in your basement could bring in some emergency cash.
An Emergency Fund Is Your Financial Parachute
If you’ve ever had to resort to paying for an unplanned bill with a credit card (knowing you won’t have the cash to pay it off anytime soon), you’re not alone. Committing to build an emergency fund over time is one of the best money moves you can make. Start saving for future emergencies now—future you will be grateful.
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking a debt relief program during November 2025. The data uncovers various trends and statistics about people seeking debt help.
Debt relief seekers: A quick look at credit cards and FICO scores
Credit card usage varies significantly across different age groups, reflecting diverse financial needs and habits.
In November 2025, the average FICO score for people seeking debt relief programs was 593.
Here's a snapshot by age group among debt relief seekers:
| Age group | Average FICO 9 credit score | Average Credit Utilization |
|---|---|---|
| 18-25 | 585 | 81% |
| 26-35 | 585 | 78% |
| 35-50 | 586 | 78% |
| 51-65 | 591 | 75% |
| Over 65 | 609 | 69% |
| All | 593 | 75% |
Use this data to evaluate your own credit habits, set financial goals, and ensure a balanced approach to managing credit throughout your life.
Credit card debt - average debt by selected states.
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average credit card debt for those with a balance was $6,021. The percentage of families with credit card debt was 45%. (Note: It used 2022 data).
Unsurprisingly, the level of credit card debt among those seeking debt relief was much higher. According to November 2025 data, 88% of the debt relief seekers had a credit card balance. The average credit card balance was $15,182.
Here's a quick look at the top five states based on average credit card balance.
| State | Average credit card balance | Average # of open credit card tradelines | Average credit limit | Average Credit Utilization |
|---|---|---|---|---|
| Alaska | $18,833 | 7 | $24,102 | 80% |
| South Dakota | $15,343 | 9 | $28,791 | 80% |
| District of Columbia | $13,535 | 9 | $27,261 | 79% |
| Alabama | $13,087 | 8 | $25,731 | 79% |
| Michigan | $13,909 | 8 | $26,156 | 78% |
The statistics are based on all debt relief seekers with a credit card balance over $0.
Are you starting to navigate your finances? Or planning for your retirement? These insights can help you make informed choices. They can help you work toward financial stability and security.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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Author Information
Written by
Ashley Maready
Ashley is an ex-museum professional turned content writer and editor. When she changed careers, she was finally able to focus on turning her financial situation around. She went from deeply in debt to homeowner in two years. Ashley has a passion for teaching others about better living through better money management.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
How many credit cards should you have?
It’s possible to have an excellent credit score with two or three credit cards. Having a few more cards doesn't necessarily hurt your credit score unless you find them hard to manage or you accumulate unaffordable debt.
How long does it take to pay off credit card debt?
It depends on how much credit card debt you have and how much you can afford to pay each month. Most payoff strategies, including bankruptcy, debt management plans, and debt resolution, can take three to five years to complete.
No matter what, the more you pay each month, the faster you’ll be out of credit card debt.
Where should I keep my emergency fund?
Keep your basic emergency fund in a no-fee savings account, separate from your other money but easy to access when needed (not just during business hours). A high-yield savings account is best, but the first priority is to make sure the money is accessible if you need it. If you have to wait two or three business days to transfer the money into your checking account, you might want to set up your checking account at the same bank, or use an online bank that will give you a debit card for easy access to your funds.