12 Reasons You Need Credit Cards in UAE

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The financial experts always warn us about using credit cards in UAE and ending up in a pool of debts. However, is this true? Well, not all of it. Any kind of debt requires responsibility and repayment capacity and the same is the case with a credit card. If you can use this plastic card responsibly, you will be surprised by how effective this financial product can be.

Here is a rundown on some reasons why you should use a credit card.

1.     First-Time Bonus

There are many credit card companies that offer an initial bonus while getting a new card. Usually, the applicants having an excellent or at least good credit may get approval for credit cards, which commonly offer huge welcome bonuses in exchange for spending a particular amount in the initial few months of the opening of the account.

Other cards attract the applicants through bonus reward miles or points, which can be redeemed for checks, statement credits, merchandise, gift cards, or travel. On the other hand, a standard debit card, which comes along with a checking account usually does not offer any initial bonus or rewards earning options. 

2.     Rewards

In case you have received a credit card, which offers rewards, then you can earn cashback or points for each dirham you spend using that card. Now, this comes with an assumption that you will not hold any balance for a month to another. In case you do, you’ll be charged with a rate of interest on that outstanding amount, which exceeds the returns on your card.

The essential part is that this is the way to maintain a card that helps you in earning free travel probably every year. Alternatively, you can also go for those credit cards in UAE that offer a cashback reward. 

3.     Cashback

There are some credit cards that offer a certain amount of cashback on making transactions using them. These cashbacks can be available on particular purchases; however, these lucrative offers include annual or quarterly spending limits. 

4.     Frequent-Flyer Points/Miles

The cardholders often earn points or miles at a rate of 1 mile per dirham in the case of net purchases or, 1 mile per 2 dirhams spent on lower-end credit cards, which do not charge an annual fee (this may vary from one card issuer to another). The value of such a reward is based on the kind of airline tickets you buy using the miles or points.

A lot of frequent flyer credit cards become much more valuable due to their introductory bonuses based on the mileage. They are generally sufficient for putting an award flight after they meet the starting spending needs involved. 

5.     Maintaining Honesty from the Vendor’s End

Let us assume that you hired a tile setter for setting some flooring in your living room. The workers spent the entire weekend measuring, cutting, grouting, and putting the spacers and tiles allowing the whole thing to set. Then, they charge you a good amount for their services.

You draw the payment upon your savings account and sign a check. Now, if 72 hours later, those tiles start shifting and the grout hasn’t settled yet, what would you do? Your living room as turned into a mess so is your head.

You can bring the issue to the notice of the agency from which you hired the contractor; however, that process may take a long time and the contractor has your money. This is the reason why you must pay for such big-ticket items through your credit card, if possible.

The credit card issuer has an incentive for discouraging frauds amongst the vendors. If at all there is an issue, they have a mechanism of trying to find out a solution for the same. So, if you dispute such a charge, the issuer will withhold the money from the tile setter, you can get your money back. 

6.     Insurance

There are many credit cards in UAE that automatically come with many consumer protection benefits, which they do not even know they have. This may include travel insurance, car rental, and product warranties, which might exceed the warranty offered by the manufacturer. 

7.     Grace Period

While purchasing with your debit card, your funds are gone at that very moment. On the other hand, while purchasing with your credit card, the funds will remain in your checking account till the time you clear your credit card bill.

Having your funds with you for some extra time may be helpful in 2 ways. First being, the time aspect of money will help you save funds, however infinitesimal. When the eventual payments get delayed, your purchase becomes a bit economical than it would have been otherwise.

Moreover, your money will stay in your bank account longer, and in case you clear off your credit card through a checking interest-bearing account and earn even on your funds during your grace period. The extra amount eventually adds up to a considerable amount as opposed to no such amount when you pay using cash, check, or debit card.

Secondly, if you consistently make payment using your credit card, you will not have to check your bank balance as critically. 

8.     Global Acceptance

There are some purchases, which can be difficult to make using a debit card. It will be easier to make payments for hotel rooms or car rentals. The hotels and car rental want their customers to pay using their credit cards as it becomes simpler for them to charge their customers for the damages caused to a car or a room. The other reason is that unless you’ve done a pre-payment for your hotel stay or car rental, the merchant does not know the final transaction amount and hence, has to block out some amount of your credit line for protecting themselves from potential charges that they did not anticipate.

Therefore, if you wish to make payment for one of these items using your debit card, the company may ask you to put a hold of hundreds of dirhams on your bank account. You must also  know that while traveling abroad, the merchants will not accept your debit card always, no matter, which bank it belongs to. 

9.     Insurance

Most of the credit cards in UAE automatically include a variety of consumer protections, which you do not even realize you have. These may include insurance for a rental car (secondary to the personal car insurance), product warranties (that may exceed the warranty offered by the manufacturer), and travel insurance. 

10.Help during Contingencies

It is suggested that you must have an emergency fund so that you are able to cope up with the tough situations that you face in life. However, it is not a cakewalk.

What would you do if your computer suddenly stops working or your vehicle fails? A lot of you consider these two a requirement for doing other things in your lives. Most of you also end up paying for your car repairs or buy new computers using your credit cards as you have no contingency funds. As long as you are clearing your debts in time, there is no issue in using your credit cards for these payments. However, if you are unable to do that, you need a spare working computer and car for emergencies. 

11.Maintaining your Credit Score

Sooner or later, you may require a loan or mortgage, and you would want to have a good credit Score for that. The credit cards will not cause you as much trouble as it is difficult for the lenders to decide the terms they can offer you.

If you have a credit card and are using it responsibly, you will be able to build your credit score with time. Whenever there is a suitable time, you can get a better deal. When you clear your payments every month, your experience will seem just like the one as your debit card.  

12.Tracking your Spending

You can easily keep track of where you are spending your money when using a credit card. However, there is a problem. You will get your card statements every month, which will show you where you are spending your money. Moreover, it is also easier to make your purchases through a credit card than using cash.

Long story short, your cash may be “followed” with more cash, but a credit card does not involve such things. The statements for these plastic cards will show your spending accurately and a few of the credit card issuers also classify them. In case you have a budget, this can be an effective tool. If you are able to control your spending, your card statements can be very helpful in your personal financing. 

The Parting Words!

Credit cards in UAE can be best enjoyed by the ones who are able to use it wisely and responsibly. You must be able to pay your monthly bills (in full preferably) on or prior to the due date of payment. In case you already know how to be a responsible credit cardholder, you can make the most of your purchases through your credit card.

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