Me, Myself and my Credit Card...

May 11, 2010 

Year 2002. New world, new environment. Just out of college and full of energy. Finding a job was a herculean task, but what proved easier was obtaining a credit card. The day I joined the new company, with the salary bank account came an application for credit card. Like an unsuspecting victim, I signed the credit card application form. And that was the beginning of what I call ‘my financial misery.’

Believe me, even before my salary could get credited, I had a card loaded with a credit limit of more than 2 times my monthly salary. Wow! Amazing! I thought.   All that was required was a simple swipe and a signature. (Did not matter whether it was yours!). And what would you do with all the free money? (Can’t believe I thought so!) Spend it!

I was rather conservative when it came to spending, but this tiny 3’ 2 plastic card changed it all. The spendthrift in me woke up and before I could ponder, I had a swanky Nokia 3530 around my neck with MP3 ringtones often showing it off to my friends and colleagues, albeit with a little liability on me.  It did not stop there. The credit card paved way towards satisfying my needs beyond control. Branded clothes, watches, shoes were the things that followed. The credit card had given a whole new dimension to my spending. Little did I realize that the plastic would create a persistent shadow of mounting debt that would detrimentally affect several years of my career!

By the end of my first two year in job I casually had a look at my spending and saving graph which showed a drastic result. The spending graph showed its arrow pointing northwards while I maintained the credit card just paying minimum amount due of 5% on the outstanding of the card. That was a huge mistake, I realise! The outstanding on my card remained still the same though I had been paying regularly. For the bank I was the perfect customer, who paid on time and paid them a good interest rate. They had made a very good decision.

“This is it,” I said to myself and my perspective on credit cards changed that day onwards. My savings were not more than zero and my spending were far exceeding what I could actually afford. The main culprit, you are right, was my credit card. The hefty interest charges coupled with overlimit charges, late payment fees etc had ballooned to such an extent that I thought of seeking a debt counselor.

Well, I did not do so.

  • I made a pact with myself. And here is how I solved my debt crisis. (You can too!)
  • I locked my credit card in a locker never to use it again except for booking airline ticket. (Here again, I cleared the outstanding the very next month. Or else I would end up paying a higher ticket price if interest on purchase is added)
  • I made sure that I pay at least 25% of the outstanding till I paid everything that was outstanding on my credit card.
  • Set up a direct debit on the bank account so that I do need to remember the dates of repayment.
  • Control spending and unnecessary purchases. Make a clear distinction between ‘need to have’ and ‘nice to have’ things. Be a disciplined buyer. Think ‘thrice’ before you swipe a credit card.
  • Once the outstanding is settled, in future if there are any outstanding to be settled, settle it as and when they are due. Do not carry forward the balances to the coming months. Certain banks charge interest on the whole purchase from the date of transaction and not only on outstanding
  • Use debit card as much as possible. (You need to have money in your bank account for this!) Spend what you have. Do not spend money using credit card even if you expect a future cash inflows.
  • Do not subscribe to new credit card unless the need is absolute. Remember temptations can sometimes put you in trouble.
    Make a budget. You might think you don't need a budget, but that's probably why I was in debt. Make a budget. Put a name to every Rupee/Dirham. Have a plan for spending each Rupee/Dirham before spending. This is the key. Well, these are the strategies that I adopt(ed) and were helpful to me. If you have any other strategies please comment, so that they will be useful for others.

The financial crisis has taught all of us a vital lesson when it comes to saving and spending habits. Who were once reckless spenders have learnt it the hard way, and those who were prudent in their spending habits have appreciated themselves for being so. You need not be a financial pundit to understand these simple lessons. Credit cards are like double edged swords. Unless you use them wisely, they can be dangerous. They are not a vice if used in a disciplined way. If you are clever enough, credit cards could be used in such a way that you reap good rewards through various discounts, skymiles-which could be used for various purchases, coupons which carry great offers. But then again you need to realise that credit cards promote spending.

The truth about credit cards is that while they make our lives much more convenient, they also make our lives more expensive. Take control of your credit card and don't let it control you.

Deepak Machado - Archives:


By Deepak Machado, Belman - Dubai
(Deepak M Machado hails from Belman. He is a banker by profession and currently is based in Dubai. He is an MBA by qualification from Mangalore University and has a BA Honours degree specialising in Economics from Loyola College, Chennai. He has served on the editorial boards of several magazines while in college and later. He can be reached at
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Comment on this article

  • ruchir agarwal, mangalore

    Fri, May 14 2010

    I too had a credit card and ewen after paying the balance regularly and keeping nill balance the bill of the credit card kept on comming for months asking minimum balance!!.Finally a bill came asking us to pay up or they will use legal measures.We cancelled the and on phone still no use.Finally someone adviced me to EMAIL the card issuing service and that worked in a span of 2 days.We got immediate response also a apology letter.So my freinds in Daijiworld if you have any problem about your card just EMAIL them instead of running from here to there

  • Allwyn Peris, Kaikamba/Qatar

    Fri, May 14 2010

    I believe many people do not want to the truth. What Deepak has written is 100% truth. most of the youth people have CC and misuse them, often with devastating results. let us appreciate the article which has shed light on a very sensitive issue. Spend what you have. Haasige iddaste kaalu chaachu.

  • steve, Sharjah

    Wed, May 12 2010

    Thanks Pearl. Very simple I commend every women, like "NARI MUNIDARE MARI". Still If I need to elaborate then CC is very useful for me to book online tickets even for my friends...very useful to go & dine with friends ect. Now if you don’t have CC means you are like bachelor in ME. Some People suffer in married wife life cause they don’t know how to balance. likewise many are happy in married wife life like me. So my dear CC wife is very very lucrative, superlative and multi vitamin tab not too much nor too less.Hope you understood.

  • oneal Dcunha, Abu Dhabi

    Wed, May 12 2010

    Credit cards are a convenient good as long as you settle the outstanding within the time frame as you get extra cash in the interim, is convenient to make payments, can help you track your expenses large or small, get your rewards if any. If you are not sure of your ability to repay you are doomed as the annual interst can be 24-30%.

  • adshenoy, mangloor

    Wed, May 12 2010

    Today, conspiring credit institutions including banks and business institutions the Credit Card is a necessary evil. One must be very careful not to fall prey to these modern menaces.
    Yes its easy to pay with credit cards but it is difficult when the bill arrives to pay the debt:
    Here are few clues one has to keep in mind while possessing credit card:
    1. Keep low credit amount.
    2. alwyas think you are paying cash when transacting.
    3. Only transact in situations when you are unable to pay cash.
    4. Do not fall prey to modern business gimmicks- buy today and pay later traps.
    5. Even if one has to pay by credit card, do it but go and pay the bill right away rather than waiting at the end.
    6. If you are wise use the grace period to your advantage- ie investing the money.
    7.Always bear in mind credit card is a debt instrument.
    8. Have only one credit card for the family. Dicourage spousal credit cards.
    9. Keep track of spending if you have to.
    10. Buy only the needs and not the greeds.
    11. last but not the least but most important: PAY by CASH, CASH and CASH not by CREDIT.

  • Melroy, Dubai

    Wed, May 12 2010

    Nice article, though CC has lots of dis advantages for those people who dont have control on their spending, but there are enormous benefits of CC.Why blame CC make sure you posess a CC from the bank where you also have an savings account and instruct bank to set a auto payment method on the due date. you will be never tempted to spend more because you know what is your savings account balance.

  • pooja, chennai/mumbai

    Tue, May 11 2010

    hye deeps... nice article... its so gud 2 c u writin this

  • A.S.Mathew, U.S.A.

    Tue, May 11 2010

    The credit card culure of living beyond our means, and on debt has finally caught up with everybody.

    Even though, it is a very convenient tool in conducting economic transactions anywhere in the world, credit card can be the worst trap of life. And to recover from that trap, it is very hard to do.

    Keep only one card with limited credit range. Don't take the card when we are out for shopping, and
    we will be happy when the time of monthly statements arrive.


    Tue, May 11 2010

    Hai Deepak,
    Your article was great but you have shown only the disadvantages.Always try to pay two days before the reqd date as we tend to forget.Also scrap the Pin no in your card and memorize it as when you give it to swipe at any restaurents,super markets etc anybody can note your Pin no and the details of your card and use it for online transactions.

  • Kateel Ramesh Prabhu, Mangalore/Bengalur

    Tue, May 11 2010

    A straight forward artcle by a Professional.Credit card now a days is an important tool for needy spending such as online payment of electricity,telephone,water bills etc.,Booking bus/train/air tickets too which has become so convenient at home.Only thing is that one has to take extreme care in choosing spending.Confine to only need based expenditures.Keep sufficient balance in the account at the time of bill debit date.Always check the account balance position.If properly used the CC can be the best companian in travel as well as in daily life {like wife).As rightly said do not alow it to control you.

  • Pearl D'Silva, Mangalore/Bangalore

    Tue, May 11 2010

    Mr.steve,Sharjah could you please elaborate what is the similarity between a credit card and a woman?

  • Anila, Mumbai

    Tue, May 11 2010

    Hi Deepak, it was indeed a good write-up on the Credit Card (CC) disadvantage's and to top it all i just got 1 CC for myself too after refusing for so many years. Will surely follow the rules and use the CC wisely. A must read article.

  • Jawar D'Souza, M'Lore/Doha

    Tue, May 11 2010

    Credit card is really a dangerous card, the Banks lure you by giving some offer's to take a credit card. I am having a account in Doha Bank, they put up a offer credit card free for life plus a DVD free, I went and checked what were the hidden clause's they said nothing, only what you spend you will have to pay with nomial interest. I asked if I dont spend in one month will I have to pay they said no, good I applied got the DVD, card took the card home took a Scissors cut the card into 2 and threw it into the dust bin, I got a free DVD. One more incident, I am having Masherek Bank's certificate their agent's were calling me daily so to end the menace, I visited them. They told me if I take a credit card my chances of winning will be double, I asked what were the fees, 50 Qr after you activate it, I said O.K. in few days I got the card I just kept it in my room, many times they called me and told me to activate it, once they came up with some offer to activate it I never did though I am holding the certificate for more than 10 year's I never won a price. This is how you have to use your credit Card. Now there is offer in IBQ if you transfer your salary and take a loan or a credit card you will get a free Air Ticket, they have a limit in the salary, I fall a bit short other wise I would have gone for it. I would take the ticket and never would have used the credit card. Some times they call and tell about the offer's but one has to be careful check all the hidden clauses.

  • Muhammad, Mangalore / Muscat

    Tue, May 11 2010

    Hi Deepak,

    Thats was fantastic move. I appreciate your control on your desires. by locking credit card in the locker i am sure that might have tempted to use it in between.

    Well, I two had similar exp. i paid every month 5% of the due for 2 years still i had almost same amount of my purchase due with the bank.

    I suggest just close the credit card until you completely settle the due amount otherwise ppl like me may not be able to control when the card with us during the need. I did settle the complete outstanding and then closed credit card for ever.

    steve, Sharjah you said it right it's like a women :) ...

  • Seema, Mangalore

    Tue, May 11 2010

    Good article. I guess one in ten experience and regret later. Having a credit card is nice, but you should know how to spend. I too had a credit card and used to spend lavishly. Now, the Credit Card Company itself has converted my account to EMI option and I'm paying the EMI's for which I spent long time back. Never own a credit card, if you know know how to maintain. :)

  • Jack Salian, Mumbai / Dubai

    Tue, May 11 2010

    Hi Deepak. Good article for us readers as most of us easily succumb to the lure of credit cards...

  • steve, Sharjah

    Mon, May 10 2010

    Thanks Deepak nice one provoked inner thoughts. These credit cards are like womens.You got it!!

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