Credit Cards : Keep it or Cut it?

I have been an OFW in Abu Dhabi, UAE for 9 years now and I have heard a lot of horror stories about our kabayans or even other expats who are sent to jail because of inability to pay their enormous credit card debts.

Back in the day – credit cards are being offered like pancakes and people are having 5 or more credit cards coming from different banks. Even in this time and age – there are still a few who owns more than 1 credit card (that includes me) and this brings the question – should I keep it or cut it?

Below are some guidelines/checklist to help you decide whether to keep it or cut it.  After reading this – sit back, contemplate about it and later decide what to do next with your cards.

CUT IT NOW!

  1. An sms came saying there is a 50% sale on your favorite brand – you were so ecstatic and you head fast to the nearest shop and swipe your cards like there’s no tomorrow.
  2. Your phone is just less than a year old – and suddenly new releases just came out and you cant wait but to upgrade your phone soon as possible.
  3. You’ve got more than 10 pair of shoes and loads of new dresses still with price tags on it and you tell your parents/friend/boyfriend/girlfriend/husband/wife  that you have nothing to wear and you need to pay a visit to your fave mall within the week.
  4. You feel remorse after your purchases and double that when you receive your bill.
  5. Your credit limit is maxed out every month.
  6. You are only paying the interest or the minimum amount to pay in your cards.
  7. Your credit card bill is more than half of your entire salary.

KEEP IT!

  1. You are not affected by the flashing red signs in each and every store in the mall screaming that they are on SALE!
  2. You have no issues wearing the same old OOTD.
  3. You know all the freebies and privileges of your cards (0% Interest, Cash Back Rewards, Points systems)
  4. You rarely have to pay credit card interest – rather you are always claiming cash back rewards or gift certificates thru you credit cards.
  5. You keep track of your credit card expenses.
  6. You know how to take advantage of the Easy installment plans of the credit card company.
  7. You pay 100% of your dues on time.

Personally, I have decided to keep it – you ask why? Because I have mastered how to manage it. I have realized that owning a credit card could be an advantage once you learn how to control it and not the other way around.

I am treating it as cash – all our expenses may it be as low as AED 20 or as high as AED 10,000 or more – I am using my credit card to pay all our purchases so that:

  1. I can later track our expenses and update my personal cash flow sheet
  2. For my huge expenses especially flight tickets/ visa expenses etc – I can convert it to easy installment plans so that I can pay it gradually and will not wreck our budget for the month.
  3. The more I accumulate in the card – the more points and rewards I earn.

But when I say cash – that means soon as I swipe that card – that is considered real time expense, it’s gone, it’s already spent. You should not pile up the bills and let the bank charge you with interest. These should be paid in full on the same month it was spent to save you from paying unwanted interest. I always say to my husband that I’ve been tricking the banks for a long time – because I use their money – I don’t pay interest – and it is the bank that always pays me whenever I claim the cashback rewards and certificates. Especially in the UAE, the bank offers good reward programs for your credit card usage which is why,there are a lot of people that are lured by it and tempted to spend more thinking the more they spend the more rewards they could grab. Yes that’s true – but if used without thinking of your dues then that’s another story.

If you are shopaholic and an impulsive buyer – I would advise that you grab your scissors now – and do the drill right at this moment because this could save you years of paying the interest that will soon pile up because of your bad spending habits. At the end of the day – I believe a person should first start working on disciplining oneself first before thinking of having or owning a credit card. 

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