5 Ways to Keep Emergencies Off Your Credit and Avoid Penalty Rates

canceling credit card
canceling credit card

Late with your credit card payment, even by a few days? Your procrastinating could prompt a new "penalty rate" of up to 29.99% if your Visa or MasterCard has the Bank of America logo, the bank confirmed late last month.

While this rate will only be applied to new purchases made after the penalty is applied (and "an account will be reviewed before it is implemented," according to the bank), it could be the new trigger for a cascade of bad credit experiences. For one of my good friends, the day her credit card rate jumped to 24.99% was the signal of a downturn that didn't end until she'd gone through bankruptcy -- all the more reason to find ways to (a) avoid being late on your credit card payment and (b) avoid using credit at all.

In 2003, I closed the last of three credit cards I had and have since had to live a life full of crises but without credit. While not everyone would choose to live like this, there's no reason not to experiment with a credit-less life now, while your interest rate is still low and penalty-free.

Since one of the biggest reasons people have credit cards is for those "emergencies" that pop up from time to time, let me offer some suggestions about how to get creative when you have no credit cards to fall back on but need cash fast. Even if you're not willing to go "credit card free," these tips can help you keep some of those new expenses off your credit card -- and keep the penalty rate as close to "zero" as possible.