Credit cards are one of the most common ways to build credit and finance large purchases. Furthermore, many offer additional benefits such as the ability to earn cash back or airline miles.
Choosing the right credit card in UAE from a reputable bank is crucial if you want to offset the risk of incurring high-interest rates, annual fees, and other charges that can potentially accumulate and cause financial strain. If you can use your credit card responsibly, you’re actually better off using a credit card rather than a debit card and limiting your cash transactions.
Let’s look at why the credit card wins, as well as what features to look out for.
- Low-interest rate: A low-interest rate can save you a significant amount of money over time, especially if you carry a balance on your credit card. Be aware that interest rates can vary depending on your credit score and other factors, and that some cards offer variable interest rates that can change over time.
- No annual fee: Paying an annual fee can be a significant expense that eats into any rewards or benefits you earn from using your credit card. Look for a card that doesn’t charge an annual fee, or consider whether the rewards and benefits you’ll earn from a card with an annual fee are worth the expense.
- Rewards program: Rewards programs can vary widely depending on the card issuer and the type of rewards offered. Look for a card that offers rewards that align with your spending habits and preferences, whether that’s cash back, travel rewards, or points that can be redeemed for merchandise or other perks.
- Sign-up bonus: Some credit cards offer a sign-up bonus when you meet certain spending requirements within a specified timeframe. Look for a card with a sign-up bonus that aligns with your spending habits and can provide a boost to your rewards-earning potential.
- Introductory Annual Percentage Rate (APR): Some credit cards offer a 0% introductory APR on purchases or balance transfers for a certain period of time, which can help you save money on interest charges. Be aware that there may be a balance transfer fee, and that the interest rate may increase after the introductory period ends.
- Fraud protection: Credit card fraud can be a significant concern, but many credit cards offer strong fraud protection measures such as alerts for unusual activity and zero liability for fraudulent purchases. Make sure to read the card issuer’s fraud protection policy and understand how to report any suspicious activity.
- Travel perks: If you travel frequently, look for a card that offers perks such as travel insurance, airport lounge access, and no foreign transaction fees. Be aware that some travel perks may come with an annual fee or other requirements, such as spending a certain amount on the card each year.
- Balance transfer option: If you have high-interest credit card debt, a balance transfer option can be a useful tool for reducing your interest charges and paying down your debt more quickly. Be aware that there may be a balance transfer fee, and that the interest rate may increase after the introductory period ends.
- Credit monitoring: Credit card issuers may offer free credit monitoring services, which can help you stay on top of your credit score and detect any suspicious activity. Make sure to understand what types of alerts and monitoring services are offered and how to access them.
- Mobile app: Many credit card issuers offer mobile apps that allow you to manage your account, pay your bill, and track your rewards on the go. Make sure to download the app and understand how to use its features to make the most of your credit card.
Credit cards are best used by the self-disciplined, who are aware of their ability to pay the monthly bill (preferably in full) on or before the due date. If you already know how to use a credit card responsibly, switch as many of your purchases to your credit card as possible, and only use your debit card for ATM access. If you do, you will be ahead of those who pay with a debit card, check, or cash due to the combination of rewards, buyer protection, and the value of cash-in-hand.