Credit cards can be a lot less dangerous when used to manage your finances

Credit cards can be a lot less dangerous when used to manage your finances

Dubai: Budgeting is all about avoiding spending money that you don’t have, but when you take out a credit card, you spend money you don’t have. So how can the two co-exist? Although the words ‘credit card’ and ‘budget’ are two words rarely used in the same sentence, there are ways wherein credit cards can be used to elevate your budgeting skills and even help improve them. However, keep in mind that credit cards can still pose serious threat to your financial plans if you use them without a budget or without personal limits. Apart from high interest, unsecured debt still being an escalating issue, compounding the problem further is the fact that the average credit card annual percentage interest rate (APR) remains a steep 20 per cent globally, making it difficult for users to make a dent in their balances as interest balloons. The go-to logic to avoiding the pitfalls of credit is this - consolidate debt at a lower interest rate using a balance transfer credit card or a personal loan, create a plan to pay off all debts as soon as possible and stop using credit altogether. However, not everyone needs to resort to such drastic measures.