The Debt Panel: 'How can we pay off our credit cards and start saving?'

The couple is seeking advice on how to clear their debt and improve their finances

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My husband and I have credit card debt worth Dh35,000 ($9,530) and Dh40,000, respectively. We have been trying to clear this debt for many years now, but with little success.

I earn a monthly salary of Dh10,000, while my husband earns Dh8,000 every month.

There were times when the credit card balance was manageable, but circumstances forced us to spend using our cards and we were caught in the spiral of debt again.

We feel frustrated as the lion's share of our salaries goes to servicing the credit card debt. This stops us from saving for our future or other meaningful goals.

Our friends have been advising us to use our emergency fund to pay off one credit card in full and convert debt on the other card into instalments.

But I am afraid that will leave us with no money in case something happens. With no cash reserves, we will fall back on using our credit card, driving us further into debt.

Is this a wise thing to do to improve our finances? SF, Sharjah

Debt panellist 1: Steve Cronin, founder of

You are right to be wary of using your emergency fund to pay off the card debt.

It is not always easy to find the most appropriate balance of saving money or reducing expensive debt.

Emergency funds are important in case one or both of you lose your job, or a family member falls sick without insurance cover.

If you depleted your cash reserves and unexpectedly lost a source of income, you might struggle to make the payments on your remaining debt.

However, you have to do something as you are caught in this cycle of paying down debt only to find that card interest plus new spending on the card both build the balance back up again.

As you have discovered, you can be trapped in this cycle for years without much progress.

Talk to your bank — and other banks — about converting the full card debt from both cards into a consolidation loan.

This should reduce the monthly payment on the new loan, as well as the interest rate on your debt.

It will also leave your emergency fund intact. Given that you earn a combined salary of Dh18,000 and have not been missing payments, I don’t see any reason why you couldn’t get a consolidation loan.

Once you have the loan, you can focus on getting your finances back on track.

Aim to keep your emergency fund at around six months worth of expenses, including the loan payment. That way, you can be confident of not missing payments or having to resort to card use if you do experience unexpected cash flow problems.

You will also need to find ways to reduce your spending until you are back on track and, even then, to make sure your spending is sustainable through good times and bad.

You should agree not to put anything on a credit card that you can’t pay off in full that month.

Personal loans are not ideal either but they are much better than borrowing on a credit card as the interest rates are lower.

Hopefully, you can transition gradually to a debt-free life and start to save and invest properly for your future.

Debt panellist 2: Carol Glynn, founder of Conscious Finance Coaching

Paying off credit card debt can be a challenging process, but it is an important step in improving your finances and reducing stress.

In your case, using your emergency fund to pay off one credit card in full and converting debt on the other card into instalments could be a good strategy if you still have enough money in your emergency fund to cover at least three to six months of living expenses after making the payment.

If you are worried about losing your emergency fund, you could consider keeping a portion of it untouched, while using the rest to pay down part of your debt.

This way, you will still have some financial cushion in case of an emergency, but also make progress in paying down your debt.

Watch: How to manage your finances

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Another option to consider is negotiating with your bank to secure a consolidation loan.

This will lower the amount of interest you pay over time, possibly free up more money in your budget and also give you a date on which you will be debt-free.

It may be helpful to re-examine your monthly expenses to see if there are any areas where you can cut back or adjust your spending habits to allocate more funds towards paying down your debt.

It is also important, once paid off or reduced, to consider cancelling at least one of your credit cards or reducing the credit limit to half of your monthly salary to avoid falling back into the cycle of debt.

This will reduce the risk of accruing more debt in the future.

Furthermore, using your emergency fund for unexpected expenses rather than relying on credit cards can be more financially advantageous.

Credit card interest rates are very high. However, using your emergency fund carries no interest, is less stressful and will not harm your credit rating.

Debt panellist 3: Felicity Glover, personal finance editor at The National

Long-term credit card debt is an issue for many people.

I have said this many times before: paying a minimum amount on a credit card each month will not lower the debt. Instead, the combined high interest rate and compounding interest will increase it every month.

It is a stressful experience and you are left feeling as though you have no control over the spiralling debt despite your best efforts.

Yes, there are some benefits to having a credit card. But, basically, if you can't afford to pay the amount owed in full every month, you should not be using one as it can take years to pay off the high interest debt, as you have discovered.

Credit card interest rates are very high, and using your emergency fund carries no interest, is less stressful and will not harm your credit rating
Carol Glynn, founder of Conscious Finance Coaching

Clearing the debt on your credit cards should be your priority.

If you feel you cannot use your emergency fund, then perhaps you should ask the bank for a consolidation loan to pay them both off in full. This will offer a much lower interest rate and a more manageable monthly payment.

I would then suggest that you cancel the cards so you are not tempted to use them and build up the debt again.

I cannot stress enough how important it is to start saving for the future. Following a budget and setting savings goals can help you begin this journey.

Look at where you can cut back, such as takeaways, dining out and unused subscriptions. On top of this, you can use public transport instead of taxis. You would be surprised at how much money you fritter away each month.

While you may think that sticking to a budget is restrictive, making sacrifices, particularly at the start of your savings journey, can lead to long-term gains and get your money working for you, rather than you working for money to pay off high-interest debt.

Being debt-free means you have more money to save each month, while the feeling of financial empowerment is priceless when you achieve this.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to

Updated: February 15, 2023, 5:00 AM