Credit cards are a useful tool in the UAE – if they’re respected

Credit cards are big business in the UAE, with about 5.9 million debit and credit cards in circulation and spending on plastic rising year-on-year.

Like any form of debt, credit cards need to be managed responsibly; credit card debt is extremely expensive and should never be considered a long-term option. That does not mean cards are intrinsically bad, but only spending what you can afford to pay, paying your bills on time and understanding the terms and conditions are all vital to your financial health.

In a survey carried out by The National this year, 72 per cent of respondents said they carried at least one credit card, while some own as many as eight. And a study last year found almost one in three have fallen behind with card payments. Here are some tips to help you choose and use your card wisely:

Pick a card to match your lifestyle

Compare the cards on offer and choose one that offers benefits you will actually use. Many offer discounts at restaurants, free or half-price cinema tickets, air miles, golfing privileges and airport lounge access. If the card suits your lifestyle, the benefits become easy to measure.

Look for zero fees

The most searched-for credit cards on our website are those with no annual fees. These are beneficial for those who just want a card for emergencies or for paying online, rather than for any added extras. Not all annual fees are bad though. Calculate the value of the benefits to see if a fee is worth it.

Sign up for newsletters

Signing up for your bank bulletin and downloading associated apps will ensure you keep track of the latest offers and benefits. There are some amazing deals with some UAE banks and card providers, such as up to 20 per cent off restaurant bills.

Don’t miss a payment

With the launch of Al Etihad Credit Bureau, every aspect of your financial history is tracked and can be analysed by banks. Missing monthly payments or bouncing cheques are some of the things logged on your credit report and can affect your future ability to access finance such as a loan, another credit card or even a mortgage.

Check the interest rate

Using your credit card then paying it off before the end of the month means you get an interest-free loan. Fail to pay off the balance in full each month, however, and you will be charged an interest rate on the outstanding balance that can be as much as 36 per cent annually on some cards.

Read the small print – all of it

Some credit cards may be free for the first year, but then charge a fee for subsequent years. Also check the charges for using your card abroad; banks will charge processing fees for international transactions as well as a foreign exchange fee. There can also be fees for international cash withdrawals. And beware of charges for late payment, inactivity or closing the account.

Pay more than the minimum balance

If you can’t afford to pay the full card balance every month, it’s essential to pay more than the minimum payment. This simply pays off the interest on the debt but doesn’t reduce the capital. In other words, your debt never goes away.

Transfer a balance

Struggling to make payments each month or have multiple card debts? Then a balance transfer could help. Some cards offer balance transfers at very low rates or even 0 per cent. That means moving debt from one card to another with a lower rate and paying zero interest for the duration of the term.

Make repayments easy

Something often overlooked when selecting a card is ease of repayment. Research if there’s a branch or payment ATM near your home or office. Going out of your way each month could make you miss a payment.

Switch to a bank loan

If your credit card debt is too big, consolidate it into one loan with a much lower interest rate. That way you only make one payment a month and the debt becomes more manageable. Then cut up your old credit cards, to avoid building up debt again.

Change your mindset

Credit cards do not offer a never-ending supply of free money and should not be considered an additional salary. Use them responsibly and you’ll benefit from reward points, cash back, air miles and local discounts. The alternative is excessive monthly payments that can quickly become unmanageable.

Jon Richards is the chief executive of, a finance comparison site.

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