@galahad15 wrote:I agree that having emergency savings is extremely important. However, we have to keep in mind that realistically, even an emergency fund of $18,000 (just for example) is still not likely to be enough to cover the exponential medical costs incurred if someone were to hypothetically end up getting hit by a bus tomorrow, was seriously injured, and was in the hospital for an extended period of time, and required months of medical treatment to recover from. Primarily because the costs for such a kind of emergency would probably go up to as high as something between $50,000 - $100,000 or thereabouts? That's why I mentioned in an earlier post that emergency savings are unfortunately not inexhaustible, and not everyone may be able afford to fuily-cover a catastrophic emergency event solely from their savings.
The other thing to keep in mind -- if an exceptionally-low APR is truly not a reward from a cc lender, or at least an incentive of sorts to the borrower, why is it that it is (usually) so much harder in terms of UW to get a card with an APR in the low- to mid-single digits?
As far as I am best aware from what I have observed on the forum, the UW seems somewhat easier for rewards cards with high, double-digit APRs from say 16.xx% - 25.xx%+. The cards may have excellent cashback rewards or benefit perks, such as the CSR or similar cards, but the APRs themselves are typically astronomical, whereas qualifying for the very best rates on low-APR cards can sometimes be more difficult. To provide a few examples and IME, I required a 740-750 FICO for my Unify cards at 5.99% V and 8.99% F, and 730+ for my PACU card at 7.5% F. (Unfortunately I'm not 100% sure atm what the mininum FICO score needed for my BEFCU card is.)
Setting aside the rarity of someone having a card with both a $50,000-$100,000 limit and having a low-ish APR (say 5-10%), putting such a medical expense on said card would be insane. In this example, the $18,000 for emergency savings, if like most other emergency savings, took months if not years to accumulate. To suddenly have a debt exposure that's potentially more than 5x that amount, then placed on a vehicle that bears interest on top of that, would bury this person. Yes, emergencies beyond savings may happen, but credit cards are not meant to be a fallback option in that case. They're one of the worst vehicles for long-term debt, so any strategy that revolves around using them in such a case is a losing one.
Lower APRs are more difficult because they stab at the heart of the bank's risk model for issuing credit. Lower scores/higher risk users who aren't outright denied are given higher APRs with the expectation that if/when they start carrying balances, enough interest can be milked out of them before they succumb to debt and default to offset the losses the bank will incur from paying for things the person ultimately could not pay for. I'm sure there's a little bit of predatory action in some cases - people who are higher risk are often more desperate for credit and will accept heavier penalties to get it.
Heavier rewards cards are trying to entice users to swipe more because the merchant fees and AF are where they're making their money. If I had to speculate, I'd say they have high APRs because the higher APRs might incentivize people to not carry balances, leaving more room for swiping. If you aren't swiping and just paying down a balance, they're losing out on swipe fees while you're still getting benefits, so they might be upping the APR to offset that.
In the end, carrying a balance and paying interest on it is not a good thing to do. Paying less interest isn't a reward, it's just a lighter punishment. And with that we've gone off-topic a bit, so I'll end it there.
@iced wrote:
Setting aside the rarity of someone having a card with both a $50,000-$100,000 limit and having a low-ish APR (say 5-10%), putting such a medical expense on said card would be insane. In this example, the $18,000 for emergency savings, if like most other emergency savings, took months if not years to accumulate. To suddenly have a debt exposure that's potentially more than 5x that amount, then placed on a vehicle that bears interest on top of that, would bury this person. Yes, emergencies beyond savings may happen, but credit cards are not meant to be a fallback option in that case. They're one of the worst vehicles for long-term debt, so any strategy that revolves around using them in such a case is a losing one.
Lower APRs are more difficult because they stab at the heart of the bank's risk model for issuing credit. Lower scores/higher risk users who aren't outright denied are given higher APRs with the expectation that if/when they start carrying balances, enough interest can be milked out of them before they succumb to debt and default to offset the losses the bank will incur from paying for things the person ultimately could not pay for. I'm sure there's a little bit of predatory action in some cases - people who are higher risk are often more desperate for credit and will accept heavier penalties to get it.
Heavier rewards cards are trying to entice users to swipe more because the merchant fees and AF are where they're making their money. If I had to speculate, I'd say they have high APRs because the higher APRs might incentivize people to not carry balances, leaving more room for swiping. If you aren't swiping and just paying down a balance, they're losing out on swipe fees while you're still getting benefits, so they might be upping the APR to offset that.
In the end, carrying a balance and paying interest on it is not a good thing to do. Paying less interest isn't a reward, it's just a lighter punishment. And with that we've gone off-topic a bit, so I'll end it there.
Thanks for your feedback and comments. Just to be fully-clear, I wasn't trying to advocate that a person with a critical medical emergency actually attempt to charge the entire $50,000 - $100,000 amount on a credit card. I just meant to imply that having that amount of funds in emergency savings assets may not be realistic, based on the person's income level. As to whether a person were to potentially charge a portion (e.g., $5,000 - $10,000) of the medical payment amount owed to a credit card -- after first paying what s/he is able from savings, etc. -- would of course be a different story. Also cpaynter made an excellent point that I had not thought of when I wrote my earlier post, where he talked about working out a financial agreement or some medical debt forgiveness with the hospital.
Additionally -- I am sorry and I apologize to the OP, as I did not intentionally mean to go off-topic 
I've asked for an APR reduction exactly once, and recently - on my Barclays Rewards MC, hoping for that APR reduction trick of getting a SP CLI. I didn't think it would work since the card has been closed to new apps for a year they aren't interested in giving CLIs on it. But the rep was very proud to inform me they were reducing the APR from 22.9% to 19.95%. 
I suppressed a laugh and thanked the rep. I worked in customer service, hotel mgmt, and I know how much more pleasant you day is with nice customers instead of jerks yelling at you.
My lowest APR card is from a local CU, only 11% APR, and it is my least used card, I just toss them a few small bills totaling $20-30/mo. to keep it active. Why? Because it has the crappiest rewards, some nonsense where you need a gazillion points to redeem for overpriced stuff. But they just introduced a very nice rewards card, 5% on a category you chose, 3% gas, 2% groceries. I'd choose utilities for 5% & pretty much just use for that as I already get 3% groceries & 3% gas with Amex/BoA. I called about upgrading & no go, but the rep encouraged me to app; I told I'm not willing to take a HP & a new account. But now I'm looking at buying a car and they are good on car loan rates. So earlier this week I called and asked if they would do 1 HP for both the rewards card & the car loan. The rep agreed they would do that, but then cautioned me that the rewards card would have a "much higher interest rate" than my current card. I told her that if she looked at my account she would see I've never carried a balance on the card except when it had an intro 0% intro APR almost 2 years ago, so I don't care about the APR as I'll never carry balance. She just said "Oh", and I realized then that probably wasn't the smartest thing to tell a loan officer. With those kind of rewards they won't be making much on swipe fees. But I'm not ready to app yet anyway, hopefully I'll get a different loan officer when/if I do app and they other one didn't make notes.
@iced wrote:
Setting aside the rarity of someone having a card with both a $50,000-$100,000 limit and having a low-ish APR (say 5-10%), putting such a medical expense on said card would be insane. In this example, the $18,000 for emergency savings, if like most other emergency savings, took months if not years to accumulate. To suddenly have a debt exposure that's potentially more than 5x that amount, then placed on a vehicle that bears interest on top of that, would bury this person. Yes, emergencies beyond savings may happen, but credit cards are not meant to be a fallback option in that case. They're one of the worst vehicles for long-term debt, so any strategy that revolves around using them in such a case is a losing one.
My FNBO credit card has a $50,000 limit, 7.25% APR, and pays 1.5% cash back on all purchases. These things can be done, provided one trys the impossible occasionally.
With a true emergency, you may not have any choice. If a serious accident or illness forced me into a wheelchair, I might have to spend a lot of unexpected money, not just due to the injury and buying a wheelchair, but also house modifications such as adding entry ramps to a home, or other modifications inside the home. Thats what a true financial emergency IS, you have to spend on the unexpected, and you can't delay the urgent need for a year or two while you work on increasing your financial reserves. And no matter how big your reserves, there is always that tiny chance that a big emergency could come up that overwhelms any planning you may have made. Tornado rips the roof off your home, pipe break causes water to damage your home, furniture, clothes, rugs... Some drunk runs off the road and plows their vehicle into your home. etc.
I look at this as just another safety net. One that doesn't cost money if its never needed, one that barely costs a few minutes a year for a couple years in order to create that additional safety net. The downside of course is that you might never have to carry a balance, so you wasted those few minutes X a few years. Thats not really much of a downside...
