Are You Making These Costly Credit Card Mistakes?
With the 21st century becoming a cashless age, these little plastic cards called the credit cards are becoming a blessing when it comes to an unplanned and unexpected lot of purchases. Although, no matter how convenient credit cards have made our life financially, if not used well, it will take no time for these little cards to become a curse. Though the customers enjoy best credit card offers in UAE, there are a few mistakes that credit cardholders might make which can prove to be costly for them. The cardholders need to avoid these mistakes in order to use their plastic money efficiently.
Exceeding the Credit Card Limit
There are a lot of people who own credit cards in UAE but have a lack of information regarding the credit limit on them. This lack of information can lead the cardholder into making a mistake of exceeding the credit limit on their cards. On the occurrence of this, the cardholder is liable to pay an over-limit fee which is decided by the bank or the financial institution who has issued the card. The credit card holder is entitled to pay an over-limit fee if the current or outstanding balance exceeds the set credit limit. Cash Advances, interest, and other charges are all a part of the outstanding balance of an account. The over-limit fee may vary from one bank or financial institution to another. The customers can choose from a variety of best credit card offers in UAE.
Not Keeping the Track of the Credit Card Statements
The credit cardholders should be aware of the policies of the bank in regard to the interests and fees as they may vary from card to card. There is a list of fees that a bank charges from the cardholders which includes annual fees, over-limit fees, late payment fees, cash advance and more. The credit card statements should be handled as carefully as other financial documents. It is necessary to go through your statements carefully in order to be aware of all the terms and conditions. The card members should also track their credit card bills monthly as it also helps them to check if their spending is in alignment with their target budget.
Making Hefty Payments
The high credit limits may tempt the cardholders to make huge payments using their cards which may lead to high cash advances. It is better to avoid making hefty payments using credit cards in UAE as it spikes the rate of interest on an average. The payments that should not be made using a credit card include housing rent, down payment on a property, payments made while abroad, jewellery and more such payments. Ideally, these should not be funded using short-term and high-interest payment methods such as a card.
Payment of Minimum Amount Only
Another mistake that credit cardholders usually make is payment of the minimum amount only. This can result in leading the user to a debt trap because though it extends the duration of time required to pay back the bank but also increases the amount of interest incurred on this plastic money. The cardholders should timely pay their bills, that too in full if possible so that they can wave the debts off cheaper and quicker, otherwise, they will have to bear charges on the outstanding balances. In order to avoid these escalating debt levels, the consumers from the UAE have learned not to make this costly mistake.
Unaware of the Total Debt
Although residents of the UAE are usually careful when it comes to spending, still many of them are currently in debt and some do not even have any idea about their total debt. Lack of financial knowledge could lead to a high amount of personal debts. The card members should always stay informed and updated about their total debt so that they can plan their spending and budget accordingly.
Making Late Payments
The history of payment is one of the important factors while checking a person’s credit eligibility, especially when the Al Etihad Credit Bureau is in operation in the UAE. The banks charge late payment fees from the cardholders who miss the due date of the payments. It may also impact the credit source of the card user. To avoid paying this charge, the cardholder should pay the monthly bills on time. The late payment fee charged can vary from bank to bank. The customers get an opportunity to choose from best credit card offers in UAE.
Holding Too Many Credit Cards Together
If a customer keeps on applying for many credit cards in a short period of time then the issuers might get suspicious of intentions of the applicant, hence they might end up denying the application. Every application for a credit card in UAE can lead to a reduction in the credit score. New credit cards should be applied as per the requirement and not together at once.
Over to you
Above mentioned points are common credit card mistakes that cardholders tend to make. The credit card users should avoid all these mistakes as they can prove to be costly for them and they might also harm their credit score. If not managed well, these little plastic cards can lead to a lot of damage converting them into a cure from a blessing in no time.