An emergency expense could hit you at any time. Your car could stall in the driveway and force you to go to the nearest mechanic for repairs. Your roof could spring a leak in the middle of a rainstorm. You’ll have to react to these problems and cover their related costs right away. You can’t afford to ignore them.
Could your cryptocurrency help you get through these emergencies? Find out why crypto isn’t your best solution for handling emergency expenses.
Unpredictable Value
You were drawn to crypto investments because they bring the potential of high rewards. Those investments could skyrocket in value, which means you could put a lot of money in your pocket if you decided to cash out at the right moment.
To compensate for those high rewards, crypto investments come with high risks of financial loss. In 2022 alone, the crypto Bitcoin lost over 60% of its value. It’s not the only digital currency that experienced a big drop. Dogecoin lost 55% of its value that year, Ether lost 67% and Cardano lost 80%. These aren’t small losses.
The volatility of cryptocurrency makes it an unwise safety net for emergencies. You can’t depend on having enough funds to cash out when you really need it.
If you got hit with an emergency expense and your crypto investment’s value dropped, you would have to find another means for covering the expense. You could look into online borrowing options like personal loans as potential solutions. As long as you meet all of the qualifications, you could submit an application for a personal loan in a short amount of time. It could take you as little as five minutes to finish!
With an approved personal loan, you could use borrowed funds to cover your urgent expense quickly and resolve your emergency. Afterward, you could follow a steady repayment plan through a monthly billing cycle.
The Cash Out Process
Cryptocurrency investments aren’t liquid. You can’t access their monetary value until you cash them out. How can you do this? One popular method of cashing out crypto is selling it through a centralized cryptocurrency exchange. Another is hiring an OTC broker to trade the investment for you (for a commission). Once you’ve sold the investment for its cash value, you can transfer the digital funds into your bank account.
Those digital funds might not be accessible in your bank right away. It could take days for the transfer to go through. This is another reason why cryptocurrency investments aren’t effective solutions for handling emergencies. When you’re dealing with an emergency expense, you want to have access to liquid funds so that you can pay it off as soon as possible. You don’t want to sit around and wait.
Is there another way to cash out? Well, you could go to a Bitcoin ATM to sell your investments and receive the cash value. This could be a faster way to receive your earnings.
Before you consider using a Bitcoin ATM, you should know the following:
- Not all Bitcoin ATMs allow users to sell their cryptocurrency. They will only offer to purchase crypto as an option.
- Bitcoin ATMs are known for charging high transaction fees. So, your withdrawal could be lower than anticipated.
- Depending on your location, it might be hard to find a Bitcoin ATM nearby. You’re most likely to find one when you live in a major city. These are the cities with the most Bitcoin ATMs in the USA.
As you can see, using your crypto to pay for emergency expenses won’t be an easy endeavor. In some cases, it might be impossible to do.
You’d be better off building an emergency fund. With an emergency fund, you can be sure that your savings are safe, stable and accessible. You can use them to cover an urgent expense right away!
