41% of credit card debt starts with a surprise expense — 3 ways to stay ahead
It starts with an emergency: surprise medical bills, novel car tires, a home repair that couldn’t wait. Before long, what felt like a temporary fix turns into ballooning debt. 41, according to a recent Bankrate survey% of credit card debtors say their debt came primarily from emergency/unexpected expenses, and 61% of them have been carrying that balance for at least a year.
To avoid this debt altogether, it’s crucial to have a cushion for when the next unplanned expense hits. Here are three ways to stay ahead.
How to avoid debt from an unexpected expense
Separate your savings from your checking
Leverage expense tracker apps
Build a relationship with a credit union
Creating some friction between your checking and savings accounts can actually be a superb thing, especially when you’re trying to build up a cash cushion for a rainy day.
Since high-yield savings accounts are typically offered by online banks that aren’t tied to your checking account, transferring finances between them and your main bank account isn’t always instant, which can work in your favor in this instance. HYSAs also earn much better returns than your standard checking account, so it pays off to not hoard all your cash in a single checking account. Once you open a HYSA of your liking, set up an automatic transfer on payday so you’re growing your balance without thinking about it.
Both the Western Alliance Bank High-Yield Savings and the EverBank Performance Savings offer some of the strongest APYs on the marketplace currently and low (or no) minimum deposit or balance requirements. Neither have monthly fees, either.
Western Alliance Bank High-Yield Savings Account
Annual Percentage Yield (APY)
3.80% APY
Minimum balance
$1 minimum deposit
Monthly fee
None
Maximum transactions
Up to 6 transactions each month
Excessive transactions fee
The bank may charge fees for non-sufficient funds
Overdraft fee
No overdraft fee
Offer checking account?
No
Offer ATM card?
Terms apply.
Strong APY
Low minimum deposit required
No monthly fees
Bank may charge non-sufficient funds
Doesn’t offer checking account or ATM access
Accounts are opened and managed on Raisin.com
EverBank Performance℠ Savings
3.90% APY
You may conduct up to 20 external transfers per day, subject to a maximum of 10 transfers that pull deposit funds from a linked external account into your accounts at EverBank and a maximum of 10 transfers that send deposit funds from your accounts at EverBank to a linked external account, and up to 50 total external transfers per month.
Overdraft fees
N/A
Yes
No minimum balance required
Free ATM card and no ATM fees
Limited physical branch locations
To streamline your finances in preparation for an unexpected expense, an expense tracker app can help you see where every dollar goes.
PocketGuard will even notify you when you’re near or over your limit for a spending category and lets you set custom rules to monitor specific merchants or accounts. It also links to over 18,000 institutions, so everything from your checking account to your credit cards can be observed in one place.
Monarch syncs with more than 13,000 financial institutions and lets you customize your dashboard so the stuff that matters most to you is always front and center. (Users rave about the dashboard.) Find the subscriptions you forgot about, the categories where you’re consistently overspending and redirect even a little of that toward savings.
PocketGuard
Cost
Basic PocketGuard plan is free. PocketGuard Premium is $12.99 per month or $74.99 ($6.99/month) annually. Lifetime membership available at a reduced rate.
Standout features
“In My Pocket” uses your income, recurring expenses and savings goals to determine how much you have for everyday spending.
Categorizes your expenses
Yes, but users can customize
Links to accounts
Yes, users can connect accounts through Plaid and Finicity or manually add cash accounts
Availability
Offered in both the App Store (for iOS) and on Google Play (for Android)
Security features
PocketGuard utilizes bank-level encryption, PINs and biometrics like Touch ID and Face ID.
Includes payment tracker and bill-negotiation service
Lifetime membership option for additional savings
A+ from Better Business Bureau This also touches on aspects of bull market.
Limited free tier, with users encouraged to upgrade to Premium for full functionality.
Transactions may be categorized incorrectly
Monarch
Customizable transaction categories, net-worth tracker, investment portfolio tracking, financial forecasting
$8.33/month (billed $99.99 annually); $14.99/month (billed monthly). Get 50% off your first year of Core Plan with code CNBC50
Yes, but users can modify
Automatically syncs with bank accounts, credit cards, loans, retirement plans, investments and more at over 13,000 institutions
Offered for both iOS and Android. Web version also available
Maintaining only read-only access, Monarch utilizes AES 256-bit encryption and multi-factor authentication. It is SOC2 Type 2 certified and syncs accounts via Plaid, MX and Finicity.
Seven-day free trial
Easy-to-navigate dashboard with fully customizable reports and visuals
Connects with more than 13,000 financial institutions
Couples or partners can budget together in collaboration mode (each with their own login at no extra cost)
AI Assistant lets you ask questions about your finances
Can track property value via Zillow
Ad-free experience
Consistent product updates with novel features added regularly
No free version
Subscription is more expensive than competitors
Investment tracking is solid for most users but lacks advanced tools like retirement modeling, fee analysis or Monte Carlo simulations
Recommendations in the “advice” tab are generic
No undo feature when reallocating cash across budget categories
Where you bank altogether can produce a difference in handling an emergency expense. Credit unions are member-owned nonprofits, which means they are more likely to work with you when things get hard. You may be able to access a personal loan or an emergency bridge loan at a much more manageable rate than what a credit card would charge you. The key is getting in and having a relationship with your credit union.
The best credit unions are those that anyone can apply to.
Alliant Credit Union offers a no-fee checking account with monthly $20 ATM fee reimbursement and early payday. It also has a high-yield savings account, a balance transfer and cash-back credit card, all sorts of loans, plus retirement accounts. Becoming a member is easy: you just have to join through the Alliant Foundation for $5, which Alliant will donate on your behalf.
Consumers Credit Union (CCU) offers a fee-a rewards checking offering a high APY along with free checking account. There are plenty of other financial offerings such as savings accounts, loans and credit cards, too. There’s a two-step process to become a member: pay $5 to the Consumers Cooperative Association and deposit/maintain a minimum $5 in your CCU savings account.
Alliant Credit Union High-Rate Checking
Monthly maintenance fee
$0
Minimum deposit to open
$25 when opening online or over the phone
0.25% with paperless and recurring monthly electronic deposit
Free ATM network
80,000+ Alliant network ATMs
ATM fee reimbursement
Up to $20 per month
Mobile check deposit
Top-rated mobile app
ATM fee reimbursement up to $20 per month
0.25% APY
No overdraft fees
Must opt-in to paperless statements and have a recurring monthly electronic deposit to earn APY
Consumers Credit Union Rewards Checking
Up to 5.00% APY on balances up to $10,000 (0.20% APY on up to $25,000 and 0.10% APY thereafter); 0.01% APY if don’t meet requirements
$5
Yes, over 30,000 ATMs
Unlimited reimbursement for any and all ATM fees
Fees may apply; overdraft protection is available
High APY for a checking account
No minimum balance
Fee-free ATM network
Offers ATM fee reimbursement
Overdraft protection available
Get paid as much as two days early with early direct deposit
Requirements to earn high APY
Overdraft fee possible
Credit union membership required
Cash matters — so generate the most of it. Get expert tips, strategies, news and everything else you need to maximize your capital, right to your inbox. Sign up here.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can generate informed decisions with their cash. Every banking article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal finance and banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and X to stay up to date.
The best 0% APR credit cards
Which Bilt credit card should you apply for? Here’s how the Blue, Obsidian and Palladium compare
Capital One Venture Business review: Earn up to 150,000 bonus miles, $100 in annual credits
AI Disclosure:
This article has been generated and curated using advanced AI technology. While we strive for absolute accuracy, some details may be summarized or translated by autonomous systems. Please cross-reference critical financial data with official sources.
More from this Category
