<prompt> Human: Ive seen this sort of thing advised a lot in this subreddit, and it always confused me so I figured Id ask.A poster will frequently present a case like this:10k in credit card debt on a 20k limit, a car payment, and no savings. What should I do?And very frequently I find this subreddit recommends the creation of an emergency fund before paying down the credit card to zero.Why would this ever be a good idea? If the credit card isnt maxed, you can always use the credit in the case of an emergency. If the emergency hasnt come up yet, why leave emergency fund money sitting around in a savings account while you rack up interest fees on 10k in CC principle? It would be better to put all 5000 into paying down the credit card. Lets suppose after a few months of saving 5000 for the emergency fund, a 5000 emergency comes along and wipes it out. Youre still left with 10k in CC debt, and youve been paying interest on that debt every month. Contrast that with putting those savings towards the card, and leaving yourself with no emergency fund. You would manage to pay your principle down to 5000 on the CC a little bit lower, even, because your interest would also decrease, and you could roll that back into paying down the principle further. When the 5k emergency hits after a few months, you have to pay for it out of the CC, which jumps back up to less than 10k because of interest savings. Scenario 2 saves money.Basically, making an emergency fund when you have access to credit and current credit card debt means you are paying CC interest for the privilege to store money that you might need. Emergency funds seem to be a great idea if you arent in debt, or dont have access to further credit in an emergency, but a bad idea otherwise. Am I missing something?  <response>: It helps develop the habit of not using the credit card. If you have cash in savings and you use it for emergencies - it is psychologically more painful. If you use the credit card for emergencies it is easier to rationalize something maybe new wheels, or a haircut as an emergency. 