Best credit card to hopefully never touch?
August 22, 2021 12:27 PM   Subscribe

I'm recently out of debt consolidation and never want to go back. However, my savings are still meager and I'm terrified of sudden unexpected expenses, particularly on an upcoming road trip for a relative's funeral. What kind of credit card could I try to get that has a short credit limit and would be sealed in an envelope in my wallet to never be used except for a car or medical emergency? I don't see any other lifeline and I'm far past asking family and friends for help. Or tell me not to do this, I guess. There are so many options and I could use some guidance.
posted by anonymous to Work & Money (14 answers total) 5 users marked this as a favorite
No judgment, but since you've clearly had money management difficulties in the past, you should accept this knowledge about yourself/your circumstances and avoid anything that promises you anything for spending. Definitely nothing with an annual fee. I'd prioritize a card that offers a 0% introductory rate, to limit the damage in case you are forced to use it in an emergency. E.g., Chase Freedom Flex has a 15-mo. introductory 0% APR and is no-fee. (It does offer a small introductory bonus, but just ignore that in your evaluation.)
posted by praemunire at 12:32 PM on August 22, 2021 [1 favorite]

Props for getting back on track! I would look for one that DOESN'T have any particular good rewards tied to spending so that you're not tempted to use it for any purchases.
posted by needs more cowbell at 12:35 PM on August 22, 2021 [5 favorites]

Are you with a local bank (i.e. not Chase, BoA, etc) or credit union? We're with a credit union and have always just gotten the Visa or Mastercard they have. No annual fees. And then we park it in a drawer and use it only in emergencies.
posted by Thorzdad at 12:37 PM on August 22, 2021 [8 favorites]

Specifically: If there's not enough for you to feel comfortable yet on your upcoming trip, that's ok. One way or another, things will work out.

Generally: Figure out how much money you would want that credit card to have. Create a new savings account and save up that much money to put in it. Get the associated debit card for your new emergency savings account. Put its debit card in an envelope in your wallet.
posted by aniola at 1:01 PM on August 22, 2021 [2 favorites]

Many credit card companies will cancel a card with no activity after a certain point, so before it seal it up, you might want to park a low monthly subscription like Netflix on it and set up autopay.
posted by Candleman at 1:01 PM on August 22, 2021 [18 favorites]

If you apply for a card and they give you a bigger limit than you want, you can call and ask them to drop it to something you’re more comfortable with, for what it’s worth!
posted by mskyle at 1:22 PM on August 22, 2021 [5 favorites]

I have a Capital One card I got 20+ years ago (my very first card) and paid off completely 10-15+ years ago and haven't used since. They still haven't closed the account. I've had other cards and credit accounts closed after a mere 12 or 18 months of inactivity, but Capital One doesn't want to quit me.
posted by jordemort at 1:24 PM on August 22, 2021 [1 favorite]

Seconding the recommendation to set up some sort of auto-pay on it and use it for some recurring payment. If you can't treat it like a slow debit card where you pay off the balance before it accrues interest, this will at least put some activity on the account.

Definitely worth making sure the card doesn't have an annual fee associated with it. For convenience, I'd start looking at what options are available wherever you currently bank as it's likely going to be easiest to set up stuff like auto-pay that way.
posted by Aleyn at 1:44 PM on August 22, 2021 [1 favorite]

Work with your credit union to get a personal line of credit. Those have much lower interest rates.
posted by dum spiro spero at 1:52 PM on August 22, 2021 [4 favorites]

What dum spiro spero said. If you're going to be deploying this thing only in emergencies that you don't have enough savings to cover, then that will presumably mean suddenly borrowing quite substantial amounts on it that are going to take you a while to pay back; you're probably not going to be able to pay the whole lot off within a credit card's billing period, which means you are going to be paying back interest on the loan as well, and you absolutely do not want that to occur at ruinous credit card rates.
posted by flabdablet at 2:30 PM on August 22, 2021 [1 favorite]

If it helps, I have a two credit card system. One card for gas & groceries; this card is paid off every month. The other card is "for emergencies only" and if any charges are made to it, they are paid down as quickly as possible.

The value of this system is that charges to the g&g card should be roughly the same from month to month and the card should always be zeroed out every month. If this is not the case, then you either have a budgeting problem or there are some unexpected charges against the card. Fluctuations from the norm are easily identified and addressed.

Since the "emergency" card is only used for unusual expenses, you should be aware of the source of every charge. Unexpected charges on this card should be investigated at once.
posted by SPrintF at 2:48 PM on August 22, 2021 [1 favorite]

Congrats on being out of debt consolidation!

Please get in touch with your local credit union and open an account. If you qualify for (and have no reservations toward) military banks/credit unions, they're a good option; lots of happy USAA customers. More info at that Nerdwallet round-up, and note that anyone can join PenFed. You want a credit card with this financial institution (I applied over the phone with NFCU for my initial member account and then a credit card, and in each instance the application process and associated card receipt were fast), and you will want to pay a small, regular expense with the card every month. Something like your mobile phone bill. You'll set up an auto-debit with your phone company, and an auto-payment to the credit card.

The reasoning: If you're coming out of debt consolidation, you probably need to start safely rebuilding your credit. It's going to give future-you more options. Most credit unions reliably report timely credit-card payments, and establishing a relationship with a credit union now will give you access to decent rates for a car or other loan, should future-you need one. Having an emergency card (which is also re-building your credit score) helps keeps you safe from super-predatory, payday-loan-type pitfalls, because things do crop up unexpectedly in this life. Repeatedly draining your savings account in emergencies will only hinder your financial progress and offer you no cushion at all.

Lastly, I'm sorry for your loss. A road trip during a pandemic for a relative's funeral sounds so, so, difficult. You could also get a credit card for sheer peace of mind during this period, and cancel it once you're back home or after any surprise travel purchases are settled. I still think you'd want a solid institution like a local credit union to issue the card; please don't stress-sign for a 27.99%+ interest rate (plus annual fee, plus other fees; break out the magnifying glass) credit card offered via dodgy "you're qualified!" mail solicitation. Best wishes to you.
posted by Iris Gambol at 3:01 PM on August 22, 2021 [2 favorites]

Have you considered a 'line of credit,' instead?

If you have reasonable budgeting discipline and understand that it's not money that you have, they can be amazing to cover small month-to-month overdraws that trigger expensive fees to being able to cover something slightly catastrophic. Once, maybe.

Does your location have local(-ish even) credit unions? They are generally more open to extending such relationships than the big national banks.

I asked for and got a line of credit in the early part of grad school and it saved me so much money. Overdraw fees alone was killing me and had been keeping me in the red.

The usury was nothing compared to credit card percentages and it gave me another 30 days before the interest started if I needed to do so.

It did require a reliable paycheck (even if small) and some budgetary discipline.
posted by porpoise at 9:25 PM on August 22, 2021

Have you considered a 'line of credit,' instead?

Came to suggest something like this as well; I've had poor credit before (depending on your definition, I still do), but I bank with a credit union who has, in the past, allowed me to apply for a short-term, no-collateral "signature" loan over the phone in an emergency, and put the cash into my account for me to access via my debit/ATM card.

There's not the guaranteed access of having a credit card* , but it's an extra layer of work that makes it less likely to be used for frivolous things, plus a direct signature loan will be more flexible in payment plans and have better interest rates. You may be stuck with banking during normal business hours, though, but depending on the degree of "emergency" there's not a lot of things that are "we need money right this second".

* you may want to be aware that if you have a credit card that never gets used, then suddenly has a large charge on it, the credit company may flag it as possible stolen card and you may end up talking to a bank on the phone anyway; or the bank may randomly cancel the rarely-used card without letting you know too.
posted by AzraelBrown at 8:37 AM on August 23, 2021

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