Here's a closer look at how to manage your credit cards in Dubai as well as credit card limits, interest and what to use them for.
10 January 2013| Last updated on 31 December 2017
To some people credit cards are a handy part of life and to others a route to debt that can cause major problems. Here we take a look at how credit cards in Dubai work and how to manage your card and your debt sensibly.
You will get offered many credit cards whilst in Dubai from your own bank and from others but will need to think carefully before applying or accepting one. A lot of people use credit cards wrongly and end up in major debt that they can’t handle.
Credit card limits
You are usually offered a credit card with a limit 2 times or 3 times your monthly salary which sounds great but think that you would have to work for 3 months without spending anything else to pay that card off. And on top of that, you will have to pay interest on the money as well. Do you really want your limit to be that high?
If you can, ask the bank to lower your credit card limit to something that is more realistic. If they cannot do this, then set a limit for yourself and stick to it.
Plan your exit strategy
Life is constantly changing. Whether you are planning to go back home or end up being made redundant, you will have to have some sort of exit strategy in place. Not paying your debt can cause major trouble for you that can ruin your future, inhibit your travel and even end in imprisonment.
Don’t spend too far over your limit and prioritise paying all your debt off first before spending unnecessarily. You can decide how much of the balance of the card you are going to pay off every month. The lowest is usually 5% up to 100%. We recommend paying as high a percentage as possible, this means you are lowering more off the balance of what you owe, rather than the majority of your monthly payment paying off the interest on your spending.
Manage your spending
Don’t plan to get a credit card to make a major purchase but rather look at a personal loan. A credit card is okay for borrowing small amount but becomes very expensive for large amounts. The interest is less on a personal loan and the payments are for a fixed term, more manageable and you won’t be tempted to just put that one more thing on your card.
Keep your limit low
Credit card companies are going to call you offering another credit card, or offering to increase your credit limit for you. Don’t be tempted to raise your spending limit during these calls because before you know it, you will have maxed out your credit card. Stick to your guns and keep sensible.
If you find you have gone too high on your credit card and it is with your bank, arrange a meeting with them to ask if you can convert the outstanding balance to a load in order to pay off the card quicker and with lesser interest payments to be made. If you do manage to arrange this, cut the card up and never use it again!
Handy tips if you have a credit card
The most important thing is to try and live within your means and don’t be too tempted by offers of high credit limits. My grandmother always use to tell me: “If you can’t afford it you can’t have it!”