How To Deal With an Emergency - Credit Cards or Loans?

By Jason Ramin

Emergencies come up all the time. And often, they happen when you least expect them or when you’re least prepared for them. For those times when you don’t have the money on hand to handle the situation, you’ve got a couple options: an emergency personal loan or a credit card.

The last thing you need during a time of crisis is to be unsure which will be the better option. So we’ve created this blog post that will help you decide which choice is the right one for you. Keep reading to learn more about emergency loans and about whether such a loan is the right choice for you when compared to using a credit card.

What Is an Emergency Loan?

An emergency loan is a type of loan you can apply for and get approved for quickly. It will provide you with cash much faster than other types of loans. There are several different types of loans that qualify as emergency loans, including:

  • Personal Loans: You usually get a little more time to pay off personal loans, which is great when they’re used as an emergency loan because if you’re unemployed—for example—you’ll be given time to pay back a personal emergency loan when you’ve got a job.
  • Short-Term Loans: Short-term loans have a bill pay range of 30 to 60 days, giving you a little less time than a personal loan but still enough to work with. If you know you’re going to get a check or some other influx of money that will enable you to pay it off during the required time limit, a short-term loan is a great option to use in the interim.
  • Payday Loans: An emergency payday loan has to be paid off quickly—with your next paycheck. If you know you’ll be able to pay it off quickly without going into debt, these are a good option for you.

Consider the state of your personal emergency before deciding on the type of loan that would best fit your needs. You can apply for these types of loans online or in person at a bank or lending agency.

Getting Out of an Emergency with Credit Cards

Using your credit card to get out an emergency is very similar to taking out a loan. Think about it: you’re using your card to pay for something you don’t have the actual money to pay for, and you’ll have to pay it back later.

The difference is that while maxing out a credit card might be similar to a loan, the repercussions that follow are pretty different. Take a look at some of the pros and cons that come with using a credit card in an emergency.


Credit cards have set limits. You can pay for things costing you in the low thousands, but a credit card isn’t going to cover huge amounts of money for something like a medical emergency. And if your credit score isn’t very good, you might not even have the ability to max out your card in the thousands.

Even if you have a good credit score, you still might not have the pull on a credit card like you would with a personal loan, which can finance someone with good credit and payment history with a loan in the tens of thousands of dollars range.


Credit card companies have a minimum payment due, where emergency personal loans have to be paid off entirely within a set amount of time. If you choose to only make your minimum credit card payments, you’ll be paying off the debt and accrued interest for a long, long time.

Don’t Work Everywhere

There’s always a chance your card won’t work, and you’ll be left unable to pay with your card, even though your credit limit could cover the emergency. Personal loans, on the other hand, send cash directly into your bank account.

Saving Won’t Be Easy

Building up an emergency fund is obviously the ideal. After you’ve experienced an emergency and used a credit card to pay for it, you’ll be spending the money you could be saving toward an emergency fund on paying off the credit card debt.

The same is true of a personal emergency loan; however, the loan will have fixed interest rates and a set period of time to pay it off. Whereas a credit card can take much longer to pay off by virtue of its minimum payments pay option.

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