9 Tips to Manage Your First Credit Card in the UAE & Maximise Benefits

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  | Published: 16 August 2021

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Getting different opinions on managing credit cards is obvious and natural. For some people, it’s a debt trap while for others, it’s a source of earning benefits. No doubt it is an impressive financial tool but your benefits depend on how you use it. That is why the key to making the most of your credit card is by learning to manage it. New users always find it difficult and fall into the everlasting cycle of large interest and repayments. To avoid such situations, you need to be vigilant about your expenses and choose the best credit card according to your needs. 

The banks and other issuers offer a variety of credit cards in the UAE. Selecting the best credit card as per your requirements gets half the job done. How do you choose to manage it is completely up to you. If you’ve been wondering how then this article will help you maximize the benefits by walking you through the basics of managing a credit card. 

Tips to Manage Your First Credit Card in UAE

You don’t need to be a professional for managing your credit card in the UAE. It’s not just fulfilling the terms and conditions, but repayment pattern, expense limit, etc. which contribute to the credit performance. Following are some important tips to manage your first credit card in UAE.

#1 Find a Suitable Card 

Banks and financial institutions offer a wide variety of credit cards in UAE – some free or levying nominal charges, while others with hefty annual fees. It’s really important to choose the credit card that suits your financial requirements. To begin with, do proper research on various available credit cards and their rewards and benefits. It’s also necessary to consider the interest rate these cards offer. Having a low interest rate credit card is suitable for new users as it can ease out paying debts and building a good credit score. 

The cards with high annual charges often come with numerous benefits and timely rewards. However, for first-time credit card users, it can be hard to key down their terms & conditions and can get them into unwanted debts. 

#2 Understand the Terminologies 

Credit cards are similar to debit cards only in appearance. It accompanies numerous financial glossaries difficult for folks to decipher. It is important to understand what credit limit, grace period, credit history, due date, etc. means. Knowing these credit card terminologies, you can plan your card expenses and timely payments to dodge additional charges.

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#3 Keep Your Credit Limit Low & Manageable

A credit limit is a maximum amount that you can spend on your credit card. It is usually 2 to 3 times your salary; however, having a high credit limit can tempt you to spend more and will create issues during repayments. A simple calculation can give you the picture of spending two or three months’ salary at once. On top of that, the interest on big expenses is higher and can result in new debts.

#4 Make Payment in Full

You don’t have any liabilities if you make payments in full, and this is the biggest advantage of credit cards. The short-term credit loan doesn’t accrue any interest for the payment made in full within the grace period. Every issuer in UAE provides a grace period ranging from 25 to 55 days on the credit card. First-time cardholders must use this feature to avoid any charges. Additionally, making payments in full offers you rewards and cashback as extra profit. Redeem your rewards and enjoy discounts and other privileges on your next purchase. 

#5 Record Your Credit Card Statement 

Reviewing and tracking your credit card expenses is always a wise move. First-time card users don’t usually pay attention to the credit card statements before paying the outstanding bills. However, even the best credit cards in UAE can have hidden charges, and hence, it is required to keep an eye on your credit cards bills and payments. In case of any extra charges, contact the support team and get those cleared before a repayment.

#6 Use Balance Transfer Facility When Needed

It’s easy for the new cardholders to get trapped in large debt that cannot be paid in one go. In such cases, they can either stop spending until the debt is cleared or use the balance transfer facility that offers zero interest for up to 12 months on certain cards. Transferring balance to a new card will allow them extra time and no interest on repayment, thereby helping them to get rid of additional debt.

#7 Avoid Cash Advance

A credit card is not meant for cash withdrawal, for the fact that withdrawing cash puts big charges on your shoulders. However, you can use this facility only in an emergency. The new user is not aware of the fact that cash advances do not have grace periods, and the bank levy the highest charges. Hence, avoid using cash advances on your credit cards. 

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#8 Spend 50% or Less of Your Credit Limit

Although you can spend all your credit limit at once and repay using EMIs, consuming your limit results in a negative impact on your credit score attracts huge interest. Stick to spending 50% or less of your credit card limit to avoid repayment burdens and bigger liabilities against the credit card. 

#9 Avoid Having Multiple or Supplementary Cards as a Beginner  

The credit card companies may offer you free supplementary credit cards; however, this will only increase the scope of your spending. Since the other charges remain the same on each issued card, it’s not advisable to go for supplementary cards unless you need them. Similarly, owning multiple credit cards at once may bring inquiry and also impact your score. If your search for the best credit card in UAE is not over, wait for a few months or a year to get the new card.

Additional Tips to Manage Your Credit Cards in UAE

Here are a few management tips if you already own a credit card. 

  • Cash withdrawal is a big ‘NO’ until and unless it’s an emergency.
  • Pay as much as you can per month for clearing out your debt. Minimum payment will only charge you more interest. 
  • Avoid recurring payments on your credit card. 
  • Pay all your outstanding amounts on time. Failing to do so can charge you an additional fee. 
  • Set a monthly expense limit for yourself and try sticking to it. 
  • Be vigilant; keep proper track of your credit card statements and rectify errors before repayments. 
  • Use balance transfer to increase your repayment period with low interest rates. 

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Conclusion

Just like any other tool, associated results depend on how you use them. The same applies to credit cards. Simple expense management and timely credit card repayment can give you numerous benefits, help you avoid unnecessary debts, and grow financially.