Why not use credit as a contingency fund?

22 Aug

Many people often set up savings accounts with their banks, in which they hold a certain amount that they can use in case of an emergency, whether it is to pay a hospital bill or to repair a car.

But nowadays, many financial experts and connoisseurs are actually recommending that you do not make such savings, and it is better to simply borrow credit in such situations, because in that case you can either save for other needs or invest some of these savings to make some profit from them.

But in my opinion, using such credit as a backdrop is not a wise idea,

But in my opinion, using such credit as a backdrop is not a wise idea,

Because while such a strategy works great when the economy of the country you are living in is in a very good state, this strategy is getting worse one of the worst ideas in your finances.

And since the economic situation in many parts of the world is constantly volatile these days,

I suggest you save better than borrowing, even if it’s for a short period of time

credit loan

Yes, of course, investing savings in stocks, dividends or, for example, real estate seems like a wise decision, as this will give you the best return on your savings in the future. And then, in the event that you have some unexpected expenses, you can simply pay them off, for example, by credit card or credit, because these investments will allow you to pay off those loans or credit card overdraft over time, or you can, for example, and get additional funds right away.

But while this strategy worked perfectly in the past, today, the economy we live in today can miserably fail and you can either stay, so to speak, or even go into debt with these moves, because now creditors and banks are no longer offering overdrafts and loans to anyone who wants them.

Many banks have lowered their credit card limits

Many banks have lowered their credit card limits

Which means that they can no longer borrow large amounts of overdraft. At the same time, lenders, whether banks or internet lenders, are also increasingly careful and careful about who they really lend, meaning that anyone can stay without financial help even when they need it most. . And such marches are only the beginning, because the more volatile the economy, the more banks and other lenders look for ways to increase their profits and reduce the chance that they will lose money.

In the future, it is possible that banks or non-bank lenders will refuse to grant loans even to those who have a credit history of at least two days past due to further ensure that they will indeed get their money back, which means that the future may be for us. it is increasingly difficult to obtain credit.

We have savings, even if they are not very large

We have savings, even if they are not very large

They can still be a way out of bad financial situation or unexpected costs, because the savings are already yours, they are your money, and you can use them in any situation that means you don’t have to apply for credit or use credit card overdrafts that you are not sure you will get, but you can simply spend your savings and once your situation stabilizes you can rebuild your savings.

Also, if your savings are in the form of money in a savings account, it gives you quick access to them at any time, because we can never know when in life we ​​will face a situation where we need additional finances.

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