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 work in Dubai 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 you really 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.
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- so do you really want your limit to be that high?
Decide a sensible limit in advance to yourself and stick to it- one month’s salary as a limit is probably manageable. This means that you won’t go crazy on the card and you could pay it off in one or two months’ time if you had to.
Think about your exit strategy- you have to pay off all debts and loans in Dubai before relocating elsewhere, so being able to pay off your credit card in the future is a very important consideration to be made. You can end up in major trouble if you abscond without paying your debt that can ruin your future, inhibit your travel and even end in imprisonment.
Most banks offer debit cards these days that are widely accepted so ask yourself if you really need an actual credit card. Most online transactions can now be done with a debit card- online shopping, bill payment etc. helping you to not live beyond your means.
Don’t plan to get a credit card to make a major purchase- why not take out a personal loan instead? The interest is less and the payments are more manageable, for a fixed term and you won’t be tempted to just put that one more thing on your card.
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%. Clever people have as a high a % as possible- this means you are lowering more off the balance of what you actually owe, rather than the majority of your monthly payment paying off the interest of your spending.
Don’t be tempted if your credit card company calls to raise your spending limit because before you know it you will have spent up to that limit- 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- do not ever use it again!
To manage your credit card spending there are little tips and tricks you can do to minimise your exposure like not carrying your credit card around with you to avoid temptation- some people even freeze theirs in a block of ice in the freezer so it could be thawed and used for emergencies but not for that new pair of jeans you really must have but really don’t need.
Try to live within your means and don’t be too tempted by offers of high credit limits our elders had a great saying- if you can’t afford it you can’t have it...
