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Rewards and Cost of Credit Cards in the UAE

By PolicyBazaar
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Published: 29 April 2020Last Updated On: 29 December 2020

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Just like the other industries the finance industry has evolved substantially over the course of years especially during the last couple of decades. One of the modern-day boons that the banking and finance industry has given us is credit cards. The compact piece of plastic is not just a card, it can be a boon or a curse based on the way you use it. A credit card is a tool and like every other tool, its credibility depends on the knowledge of the user. The current market is filled with thousands of credit cards that come with different rewards, offers, and costs, from different providers.

While getting a credit card in the UAE, it is vital to explore the market by comparing and shortlisting some of the best cards. There are various online platforms that allow credit card applicants to explore, shortlist, and compare different credit cards in the UAE. In order to make the right decision of choosing the best cards amid the huge variety, it is crucial to have a firm knowledge about the applicable rate of interest, annual fee, and rewards offered by the provider on a particular card. An important factor to keep into consideration while opting for credit cards in the UAE is that the overall cost of holding and using a card is greatly affected by the offers that are applicable on the card.

If you are looking forward to getting a new credit card in the UAE, and you are confused about what card to actually choose don’t worry! In this thread, we will shed light and provide a detailed insight on credit card costs and rewards in the UAE that will definitely help you to make a better decision.

Signing Up for a New Credit Card in the UAE

The banking and financial tools market has grown exponentially in the past 50 years which has led to an exponential rise in the number of market players. There is a competition amongst credit card providers to get more and more customers like it was never before. In order to get more and more customers credit card providers have come up with attractive and lucrative offers like signup bonuses to extract more and more customers. Typically, credit card signup bonuses offer discounts, cashback, or some rewards after spending a threshold amount using the new credit card in the UAE. However, cardholders should not use their credit card beyond the extent to reap lucrative rewards where it starts getting difficult for them to make repayments.

The rewards only appear to be useful and attractive until the time a cardholder is able to regularly pay their bills maintaining their credit score. If you are unable to make timely repayments based on your billing cycle there will be an imposition of interest along with late fee over the principal amount which will lead to accumulation of debt. New credit card applicants should lay emphasis on joining fee while applying for new credit cards in the UAE, especially in the case of Airmiles credit cards.

Reward Programs

The major highlight of a credit card in the UAE from the perspective of a customer is undoubtedly the reward program. Majorly credit card rewards are divided into three categories, they are listed in the below-

Credit Card Type Reward Availability in the UAE Market (in percentage)

Type 1

Reward Points

58%

Type 2

Cashback

29%

Type 3

Airmiles

19%

 

While applying for credit cards in the UAE, cardholders should analyze their needs and requirements that are to fulfilled by opting for this card they are applying for. Credit card applicants can begin by analyzing their monthly expenditure that can be paid off in the form of plastic. Once they are done with the first step the next step is to assess their reward choices. Are you somebody who likes to travel or watch movies or shop? Well, based on what you really expect from the reward program of your credit card in the UAE, you can choose the type of card. For instance, people who travel frequently via flights can opt for Airmiles credit cards, on the other hand, people who’d like to maximize their savings can opt for cash back credit cards and so on.

Rate of Interest

The next most important factor that comes into picture while exploring and comparing credit cards in the UAE is the rate of interest charged on them. Credit cards are one of the most heavily charged financial tools in the market. The average applicable rate of interest on credit cards in the UAE varies from 28% to 34% based on the type of card you go for. Credit cards in the UAE that have no reward programs charge lower rates of interest i.e. around 26-28% contrary to these credit cards with beneficial reward programs charge interest rates up to 30-34%. Credit applicants should try to get the card that encompasses a majority of the benefits and features they are looking for at the lowest rates of interest.

Annual Fee

The annual fee that is being charged on the credit card is dependent on the reward program and the type of card one uses. Credit cards are usually categorized in categories like titanium, platinum, gold, silver, bronze, etc. For the credit cards in the UAE that offer a high limit, the annual fee that is charged varies from AED 175 to AED 300 and even more in case of exceptions. For example, the typical annual fee charged in the case of airmile credit cards is AED 375 to AED 425. However, if you are getting disappointed looking at the annual fee of these cards you don’t need to worry. There are a plethora of credit cards in the UAE that comes with no annual fee and allow users to enjoy the benefit of a credit card without paying a penny annually as a fee.

Reading the Credit Card Documents

For most of us reading the fine prints of credit cards turns out to be very annoying however, it does not change the fact that it is very important to do so. To have a complete understanding of the capping and terms and conditions applicable to the credit card rewards it is important to read the fine print of the credit card in the UAE. Reading the official documents issued by the provider gives you a clear idea of all the dos and don’ts of credit cards in the UAE which will eventually help you to extract the maximum benefit out of your card.

Summing it Up

As we said earlier, credit cards might turn out as a boon or curse based on how you use them. Responsible use allows cardholders to structure and manage their expenditure in an efficient manner, contrary to this, irresponsible usage of credit cards often leads to debt accumulation followed by a debt trap. As a credit card user, the best advice one can get is that no matter what card you choose, what matters is your approach and strategy while using credit cards in the UAE.