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Credit cards can be helpful and convenient in certain circumstances, but they can also be a big financial trap.

Let's say your car breaks down on the highway and you need a tow.

If you have that cash in savings, you’d immediately pay your card and you’ll have no interest to pay.

The problem is when you don’t have the savings and that emergency is growing on your credit card.

Start an Emergency Fund Quickly

A first goal is to save enough to cover monthly bills, then your next goal might be 2-3 months. Have a portion of your paycheck transferred to a high-interest savings account.

Start small, like 5% of your income, and automate your money to transfer to high yields savings.

You’ll be surprised how you won’t notice the little decrease in spending money. If you get comfortable, you can increase the amount.

Looking for a few ideas on finding money to save? Try out Flexo's 50 tips to starting an emergency fund. Here are my top 5 from the list:

  • Whenever you purchase groceries with a coupon, deposit your savings into the bank.
  • Tutor a young student in a subject you know.
  • Reuse any items you can rather than buying new, and pocket the difference in your emergency fund.
  • Shop around for a new insurance provider.
  • While paying attention to small, repetitive expenses, don’t ignore larger decisions like your car, house, and wedding. With smart choices on big-ticket items, you could fully fund an emergency account with the savings.

It doesn't have to be difficult to save some money. You just have to be creative and motivated to make it happen.

Why We Use Capital One 360 for Our Emergency Fund

We’ve been with them for years and love it their checking and savings accounts. They have all the major features we’re looking for with a bank:

  • Covered by FDIC
  • No monthly maintenance fee
  • $0 required minimum balance
  • Free online BillPay service
  • Conveniently located ATMs
  • Earn some interest rate if possible

While they don’t have the highest rates, they’re still competitive and their customer service has been great for the few occasions we’ve had to use them.

Money Hack: Build Your Credit While Saving

If you struggling with a low credit score and need to build your savings, there's an option that can help you knock out both – Self Lender.

With them, you open up a credit builder loans which you then get back and can use to additional savings.

Thoughts on Starting an Emergency Fund

Have you had to adjust and move away from credit cards to a proper emergency fund? How have you been able to work as a couple and build your emergency fund?

This post was originally posted in August 2016. It has been updated in September 2019.

About Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

1 comment add your comment

  1. I’ve never used a credit card as an emergency fund, but it’s convenient. Like you said, I can use it and then pay back from my real emergency fund. For the last couple months, I’ve been contributing about 10% of my salary to an emergency fund. I think I’ll continue until I reach one year’s expenses and after than channel the funds to something else.