Smart Credit Card User-Tips For Dubai UAE Residents
Basically, credit cards allow you to borrow other’s money for ‘Nothing‘. Yes, if used wisely, credit cards are like short terms loans but without any interest. Your purchases are protected and you can also take advantage of air-miles, cash backs and reward points. But if you use your credit cards unwisely, you might end paying a lot of interest and also find yourself in a credit card debt spiral.
Here are 8 Tips to Use Your Credit Cards Smartly In UAE:
#1. Read The Fine Print For Terms and Conditions:
Credit card should be treated like a friend and it is up to you to never allow it to become your foe. I believe, when you choose a friend, you try and evaluate and judge him based on his character and charisma. You should do the same before you sign-up for a credit card. You have to evaluate the credit card offers based on your needs, the interest rates, fees, rewards, credit limits, penalties and other important conditions. These can found in the fine print of the credit card offer.
#2. Credit Card For Everyday Expenses:
Using your credit card for daily expenses like groceries and utilities can be dangerous. If you find yourself unable to pay the credit card in bill in full every month, then you will be paying interest on these expenses and for a long time to come. So don’t unnecessarily use your credit card for expenses which you should be met with your monthly income. Credit card is for convenience…agreed! But swiping it left and right can be taxing on your finances.
Here is an infographic ‘Using Credit Cards Responsibly‘ which summarizes all the points.
#3. Don’t Splurge:
Credit cards give you a notion that you can afford anything in the present and you can always pay for those in the future. Do not fall for this emotional fallacy. Avoid buying things that you cannot afford. Whenever you have an urge to buy something which you cannot afford to pay immediately, take a days time and sleep over the pre-decision. I am sure time will give you a better perspective and preference. So, fight the urge to splurge and avoid making hasty decisions.
#4. Pay Your Credit Card Bill In Full:
Carrying a balance on your credit card month-on-month will gradually put you in a financial mess. To reiterate, do not buy things that you cannot afford with a credit card in the first place. If you do, try and clear that balance as soon as possible. Sticking to minimum payments is the worst form of financial management. Your credit card interest keeps compounding on your balance. As far as possible, pay your credit card bill in full or at least try to pay the maximum possible.
#5. Check Your Credit Card Statements:
It is imperative to check your monthly credit card statement. Checking your credit card statement promptly, helps you to keep yourself updated with any changes to terms and conditions, identify mistakes and wrong charges, and also protects your from fraud. Ignoring the monthly statement might allow certain fees or errors or frauds to to go unchecked and make your finances vulnerable to mismanagement.
#6. Do Not Max-Out Your Credit Card:
Maxing out your credit card signals that you are not good at managing your finance. It shows that whenever credit is available, you just use it whether it is necessary or not. Maxing out your credit card also increases the danger of you crossing your credit limit. There is a over-limit fee which can be slapped on your credit card if you are not careful.
Al Etihad Credit Bureau, which provides credit reports for individuals and companies in UAE will have taken into consideration your credit utilization to calculate your credit score. A very high utilization ratio can raise a red flag and can alert banks and financial institutions and can limit your chances of availing credit when you really need it.
#7. Lost Cards To be Reported Promptly:
In case you lost your credit card or if you learn it is stolen, notify your credit card company/bank immediately. Ask them to cancel it and take all the necessary action. This can save you from fraud and also unnecessary trouble.
#8. Cash Advances On Credit Cards:
Never ever take a cash advance on your credit card. The interest rates on advances are very high, there could also be a cash advance fee and you will have no grace period. That means interest is charged on your advance from day one.
How else can we use credit cards in Dubai/UAE more efficiently? What strategies do your you apply? Let me know in comments.