A Stress-Free Guide to Managing Your First Credit Card in the UAE

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“A credit card will always leave you with liability or debt”. Yes, that’s the opinion of most of the people in the UAE. It’s absolutely okay to have this opinion if you haven’t used any credit card before.

But, just give it a thought; is everyone who is using a credit card is under debt. The answer is probably not in an affirmative sense. Whether a credit card will leave you in debt or it will add a plus point to your profile, it all depends on its usage and management.

If you are a new user of credit card, here’s a guide to managing your card. Check this out: 

Get the right credit card

Since you don't own a credit card and it will be your first one, a logical place to start is to choose the best credit card in UAE and the key to a right card is research. Research well, check for rewards by different cards and choose one that aligns well with your lifestyle and spending habits. 

Essentially, you may choose from two broad categories the credit card – rewards cards and cashback cards. In case you are selecting a cashback credit card, look for cards that offer you flat-rate cashback. This can help you get the same percentage of cashback on both small as well as big purchases. On the other hand, if you are opting for flat-rate cashback, be specific about the categories against which the rewards will be offered. 

Another thing that should be considered while selecting a credit card is the interest. Choosing a low-interest would be appropriate for folks with no credit card experience because it helps build the credit profile steadily over a period of time. 

Don’t spend if you can’t afford

It’s obvious to be tempted to use your card as you have got access to free money; after all, it’s your first credit card. However, the truth is that you can’t just swipe the card and pay for all items right away. Eventually, you will need to repay the full amount in the next due cycle. Moreover, you will be charged an interest fee if you fail to pay the bill within due date and not to mention the damage to your credit scores will follow you for a long time. 

Thus, sticking to a budget is the thumb rule. Make sure that you purchase only those things that you can afford. When you adopt this, you will never have to choose between covering your necessities and paying the credit card bill. 

Stick to paying full payments

As a new user, it’s absolutely normal for you to think that paying just the minimum amount is enough. Well, that’s not the fact; if you fail to make the full payment before the due date, a heavy fine will be charged to you. Not just the interest, but carrying a balance past your payment due date can also affect your credit report. This clearly states why you need to pay the full payment. 

Do not apply for too many credit cards at once

Your first credit card has been issued and you are still in search of the best credit card in UAE. Wait it out for a few months. Applying to many credit cards at once can result in hard enquiry and may affect your credit Score. Therefore, it is advised to take a break of a few months before applying for another credit card.

Make a habit to read your credit card statements.

A credit card statement is the detailed summary of all the transactions you have done through the card during your billing cycle.  People often skip reading their statements. However, it is not advisable to pay the bills without reading the statements. This is because even the statements by the best credit cards in UAE can have certain errors or may bill unauthorized credit card charges.  Thus, it is advised to review the card statements carefully and since you are a newbie, it’s healthy if you start making this habit right from the beginning.

Never use cash advances

A credit card offers you an advantage to access cash during times of emergencies. However, being a new user, you must be unaware of the fact that the cash advances are one of the most expensive transactions through credit card. Such transactions are linked with the highest interest rate, no grace period and a cash advance fee. Therefore, relying on your credit card for cash advances is a strict ‘NO’.

To summarize

Depending on the usage, credit cards can prove to be both good as well as bad. Just practice good credit card habits - pay your bills timely, make full payments, spend only if you can afford, never use cash advances, and always prefer debit card over a credit card. Follow these habits and you will find that your credit strengthens your purchasing power rather than making you to fall into a debt trap.

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