What would happen to your finances if emergency struck? If you said you would rely on credit cards to save the day, you are not alone; a growing number of Washington residents and other Americans are relying on credit to help out in the event of a major problem. Although amassing more credit card debt in the wake of an emergency may not seem like such a big deal, experts say that the practice can be detrimental to financial health.
Statistics show that Americans simply are not saving as much as they ought to. A new survey shows that just 51 percent of Americans have more liquid assets stashed away in emergency savings than their total credit card debt. This is an extraordinarily low number, according to industry insiders.
Instead of focusing on saving, many Washington residents may think they can simply rely on credit cards to fix their financial problems in a pinch. The issue with that perspective, however, lies in the fact that many modern cards carry astronomical interest rates. Further, your credit card company may be more likely to cut credit limits at exactly the time that you would most need to utilize an 'emergency fund.'
Experts say that a combination of planning techniques can help Washingtonians avoid using credit cards in this inappropriate fashion. First, amassing several thousands of dollars in savings can help guard against the financial impact of an emergency. Clients who are having difficulty saving may be able to cut their consumer debt by tracking every expense so they know more about their spending patterns. Residents are also urged to properly insure themselves, as insurance funds can provide support in the event of a catastrophe.
Washingtonians who are struggling to make their consumer debt payments may benefit from the assistance provided by a local bankruptcy attorney. These professionals may be able to provide additional information about legal and financial options. Clients may be able to end creditor harassment and pursue a bright financial future with the help of a professional lawyer.
Source: Deseret News, "Is credit card debt the new emergency fund?" Michael De Groote, Feb. 26, 2014