Tips to Use your Credit Card Smartly in the UAE

A credit score reflects the way credit cards have been used in the past, making consistent on-time payments can improve your credit rating, missing credit card repayments hampers credit score and leads to the imposition of penalty. Credit cards in UAE impose high rates of interest on the outstanding balance and can land users into a debt trap.

Studies show that buyers tend to spend more money when they are paying using credit cards instead of cash. Credit cards in UAE are an easy and convenient method of making payments and therefore, often lead to overspending. Although credit cards come with high-interest rates, additional benefits and perks can help you save significantly, if used wisely.

If you are curious about the potential benefits and dangers of credit cards, this quick read will help you to use your credit card smartly and extract the maximum out of the financial tool.

Understanding the Utility of Credit Cards in UAE

Financial advisors often comment on the utility of credit cards and recommend using them only when unexpected expenses arise. Users should understand that credit cards are not meant for making ends meet. Moreover, it is always advised that credit card users should not rely on credit for emergencies and have some alternate savings to provide financial security.

Using Credit Cards in UAE as a Budget Management Tool

If you’re confident about your credit card usage you can use it as a budget management tool. By making all your payments using credit cards it becomes much easier to analyze and assess your monthly expenditure and the scope for savings. To ensure that your expenditure doesn’t gets out of control never spend more from your card than you have in your bank account.

Paying your Bills Timely   

Credit card providers charge heavy rates of interest on outstanding debts. The key to using a credit card smartly is resisting the temptation to overspend and you can enjoy credit facility without any interest. Making timely repayments improves credit ratings extensively and saves users from paying late fees.

Use Reward Cards

Credit card providers offer reward points and offer such frequent flyer miles, cash or retail shopping points. If you are one of those who prefer making all payments using credit cards reward points can help you save and manage your expenses efficiently. Co-branded credit cards offer hefty rewards on purchases from business partners. Basic credit cards usually offer 0.5 to 1.5% of discounts on the payment of utility bills, dining out or movie tickets. Such small savings convert into sizeable savings by the end of every billing cycle.

Check your Card Statements Regularly

Credit cards are safe and reliable tools that maximize financial ease by offering easy credit. Providers notify users about the transactions via SMS and emails. Cross-checking and reanalyzing your credit card statement with payment notifications ensures that you have been charged correctly. Moreover, this helps in figuring out that your card is not subjected to any malpractice or misuse by credit card cloning companies.

Make Use of Offers

Majority of times buying a product with a credit card provides multiple offers like an extended warranty or purchase protection. If stores lower the cost of the product within a predefined time frame after making the purchase, the bank will return a portion or entire price difference.

Choose a Sensible Credit Limit

A credit card comes with a credit limit, which varies from provider to provider. The credit limit should be chosen on the basis of your repayment capacity. In case your credit card comes with a higher credit limit than your requirement you can contact your provider to reduce your credit limit.

Conclusion

Credit cards are a modern-day marvel and like every other tool, its effects are dependent on the users. If used the right way credit cards can help to manage expenses in an orderly fashion and maximize savings. Inefficient and wrong usage can lead to financial imbalance followed by outstanding debts.