For many Overseas Filipino Workers (OFWs), credit cards can be a powerful tool for convenience and rewards, especially when navigating life abroad. However, if not managed properly, they can quickly spiral into financial trouble. Karlo Biglang-Awa, a Registered Financial Planner, explains the delicate balance OFWs must strike between enjoying the perks of credit cards and avoiding the pitfalls of debt.
Credit cards can be beneficial when used strategically. As Karlo points out, “If we are using our credit card to earn points and avail of promos, then it is in our advantage since we are also paying it on time.” By leveraging rewards programs, OFWs can earn points, cash back, or discounts, turning everyday spending into valuable perks. When used for necessities and paid off in full each month, a credit card can be a smart financial tool that adds value without costing more.
However, the flip side of credit cards is the risk of overspending. “There are certain stories wherein people are using it excessively to buy luxury items not knowing that the interest rates are piling up,” Karlo warns. The temptation to indulge in lifestyle upgrades while living abroad can be overwhelming, but if credit card debt is not paid off quickly, interest charges can mount, turning manageable purchases into long-term financial burdens.
To avoid falling into this trap, Karlo advises OFWs to set clear boundaries on credit card use. “Wise usage of credit cards is key to balancing the benefits without falling into the trap of accumulating debt,” he says. This means only charging what you can afford to pay off each month and ensuring that your credit utilization aligns with your ability to repay on time.
In conclusion, credit cards can work in your favor if used wisely, but they can also lead to significant financial setbacks if mismanaged. For OFWs aiming to build wealth and avoid debt, the key is a disciplined approach to spending and timely repayment. With the right strategy, you can harness the power of credit cards without the danger of debt.
