A Credit Card Isn't an Emergency Fund

Credit cards can be canceled unexpectedly: Even worse, companies can take the reduction in the credit card limit a step further and cancel your agreement altogether. You will still owe any amount you have on the card, but you may no longer use it. In this situation, the entire amount you were counting on in case of an emergency disappears overnight.

High credit card interest rates: When a credit card is used as an emergency fund, not only will the principal need to be paid off, but also the double-digit interest that accrues. That means you will have spent much more than just the emergency itself.

While relying on your credit card entirely for your emergency fund can be financially dangerous, it doesn't mean it should be abandoned entirely. Many emergencies need to be taken care of on a moment's notice, and a credit card can be a convenient way to initially pay for the charges. Then the credit card can be paid off with the emergency fund in the bank account before any interest charges are incurred.