Opening your first credit card? Consider these five questions first-time credit card users in Dubai must ask before applying
25 November 2020| Last updated on 22 February 2021
Before you submit your credit card application, here are a few things you must keep in mind.
A credit card can be a very convenient method of payment in Dubai. Without spending your own money, this handy financial tool gives you an instant shot of money to use for purchases, thanks to credit provided by a bank.
Owning a credit card will allow you to borrow money from your lender which must be paid back later, making it very useful if you need to make quick or big purchases but haven't the funds for it yet.
If you’re applying for your first credit card in the UAE, it’s important to do your research.
With so many attractive credit cards and reward programmes to apply for, no doubt you'll find one, but there are a few questions you must ask before you begin your application.
1. How to select the right card?
Banks in Dubai offer a wide range of credit cards to match a variety of lifestyles and preferences. Before you finalise your pick, consider your purchasing habits. Do you find yourself spending more on fuel, local shopping, or travelling?
Whatever your lifestyle may be, you're bound to find a credit card that will reward you for what you spend on often, with heaps of benefits such as cashback, free fuel, discounts at select retail partners and restaurants, travel miles, and more.
So when you're comparing credit cards, opt for the one that will give you the best benefits and privileges for your spending lifestyle.
You must check whether the credit card you're applying for has a joining or annual fee, and note that not all credit cards in Dubai have one.
If a credit card has a fee, make sure it comes with great rewards and other benefits that matches your interests.
A bank may charge you a joining fee in your first year, followed by an annual fee from the next year onwards. If you're unsure, we recommend comparing the fee with the rewards and privileges before you commit.
3. What will your credit limit be?
Your first credit card will come with a credit limit, which is the maximum amount you're allowed to spend on that card and they vary by user, card and bank. Your credit limit on a card will be determined by your provider, which is based on an assessment of your credit score.
Do avoid spending over your credit limit as you may be charged extra for exceeding it.
Your bank might offer to increase your credit limit if you're a high spender who always pays their dues on time.
4. What is your cash advance and limit?
For the uninitiated, a credit card cash advance allows you to withdraw cash from an ATM using your credit card, and this too comes with a limit set by the bank.
They make for a helpful source of emergency cash, however, there are costs to using a credit card cash advance so you must only take it if you have no other options to get the funds you need.
The reason we consider taking credit cash advance as a last resort is because the fees and interest rates charged can be high.
5. What happens when you only pay minimum amount due?
When your billing cycle approaches and you receive your credit card statement, there are two figures you can pay.
One is the total outstanding on your card. If you pay this amount before the due date, you can avoid any interest charges.
On the flip side, you can opt to pay just the minimum amount due rather than the total outstanding, however you will be charged interest for the whole amount utilised.