Question

How does building an emergency fund contribute to avoiding credit card debt?

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Having an emergency fund provides a safety net for unexpected expenses.

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An emergency fund is only helpful for long-term financial goals such as retirement.

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An emergency fund encourages reckless spending on luxury items.

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An emergency fund is unnecessary if you have a credit card.

Answer 1

Having an emergency fund provides a safety net for unexpected expenses. — True
An emergency fund is only helpful for long-term financial goals such as retirement. — False
An emergency fund encourages reckless spending on luxury items. — False
An emergency fund is unnecessary if you have a credit card. — False

Brief why: An emergency fund lets you pay for surprises without using high-interest credit, protects savings and credit scores, and covers short-term shocks (not a retirement substitute).