Question

Hannah's car broke down. She had no cash or money in her savings account, and her credit card was almost at its limit. She couldn't get her car fixed and therefore couldn't get to work. Hannah should have _____.

A) tried to raise her credit limit on her credit card
B) borrowed money from her friend
C) applied for a new credit card to pay for the repairs
D) saved money and been prepared for an emergency

Answer 1

Hannah should have saved money and been prepared for an emergency. An emergency fund is essential for unexpected financial needs and maintaining a good credit score is important for borrowing in the future.

Step-by-step explanation:

Hannah's car broke down and due to her financial constraints, she could not afford the repairs to get to work. The best course of action for Hannah would have been to save money and be prepared for an emergency. Having an emergency fund is crucial because unexpected situations, such as car troubles, can arise and require immediate financial response. While credit can assist in purchasing significant items when used responsibly, it comes with the additional cost of interest rates.

Moreover, maintaining a robust credit score is necessary, as it reflects one's credibility to lenders. One can improve their credit score by paying bills on time and not exhausting the available credit limit. When emergencies deplete savings, it demonstrates the need for such a reserve to handle unforeseen expenses, highlighting the importance of financial planning and saving.