Credit cards are like double edged swords to fight against the money problems. You should master the art of money management with credit cards only then you can make the best use of credit cards. It is a tool for managing your finances specifically in the costliest markets like UAE.
From managing your daily requirements to spending one time investments purchases, credit cards are beneficial if you know how to use them diligently.
In the UAE, various banks offer credit cards like FAB, HSBC, ADCB and many other prominent credit card providers. All these banks have a common goal to reach their customers with attractive offers. You need to act smart when you are using the credit cards and learn the management of money. Here are some smart ways for using credit cards without getting into debt.
- Make repayments a priority
- Credit card management
- Do not apply multiple credit cards
- Old is gold
- Check your credit statements
- Make repayments a priority
Credit cards offer a benefit of 30 days repayment option. This is beneficial for salaried employees and also for the business entrepreneurs where the salary payment or business cycle credit payment is in 30 days. This 30 days benefit should not be misused and the borrower should keep this in mind and make repayments on time.
Making repayments as a priority will enhance you to get a good credit score and also you have a good track record of repayments which will benefit you to get more loans.
- Making repayments on time will credit good credit score and you get access to more loan offers from the bank
- You can avoid late fees and hefty interest charges from the bank
How to make repayments hassle free?
- By setting auto debit from your bank account will make you never miss the payment but it is also important to have sufficient funds in the bank account.
- Keep reminders on the phone if you are manually making the payments every month.
Click here for Will applying for multiple credit cards impact the credit score?
- Credit card management
Credit card management is an art where you need to balance your funds every month with your salary. Remember No excess spending and minimum due payment as this will make you fall into the debt trap. When you spend more than 30% of the credit card limit you are caught by the eyes of the Etihad Credit Bureau. The credit score will gradually decrease if you are spending more than the 30 percent of the credit limit.
How to manage your credit card?
Avoid unnecessary purchases and limit your spending only to the urgent needs. Increase your earnings and then plan for spending more.
- A good credit score attracts more visibility and increases your chances for getting more credit or loans.
- Your profile will get updated and you will get loan offers with reduced interest rate.
- You can reduce your debt and Payoff your debt quickly
- Pay your debt in full every month avoid double interest charges
- First repay high interest rates debts
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- Do not apply multiple credit cards
Different credit card companies offer different benefits and entice the customers. Credit card companies will try to keep calling you and send promotional offers but do not get attracted towards the offers and apply for multiple credit cards.
If you are applying for multiple credit cards then enquiry will be done by the credit card companies. Since you applied for multiple credit cards, multiple enquiries will be done on your credit profile and it will reduce your credit score. The result is a bad credit score which will directly affect your future credit worthiness.
What can you do?
- Do not apply for many credit cards as it can badly affect your credit score
- Have less credit cards and it will help you to track payments and payment dates
- Choose credit cards according to your requirements such as if you frequently travel opt for travel credit cards
- Old is gold
Your old credit cards are a good source for you to increase your credit score. Old credit cards should not be closed as it will hit your age of credit card. Instead you should use your old credit cards and make payments on time as this will increase your chances of getting a high credit score.
Why is it important?
- Have a low credit utilization which will increase your credit availability
- Old credit cards should be kept open use them and build good credit history
- Check your credit statements
Keep a track of your credit statements as this will help you to know what you are spending and how much you are paying back. You can also know if there are any additional charges on the items you purchased. Checking your credit statements will help you to know where there are mistakes and you can correct them.
Understand its Importance
- You can rectify any mistakes on the credit card statements
- Prevent unauthorized activities on your credit card
- Get access to your credit card score by paying a nominal fee where you can avoid errors and incorrect details on your credit score
Take away
In the UAE, credit cards are good means for finance management. On time repayment, efficient balance management, regular account review, not closing old accounts, not applying multiple credit cards and following the smart ways to use credit cards will develop a strong credit availability for the card user.