According to data collected by ‘Payfort’, a third-party payment gateway in the UAE, approximately 5 million people, that is, 82% of the total population uses credit cards. With this, the region also has the second-highest per capita rate of credit card usage in the GCC at 89%.
While the use of credit cards is linked with several perks such as cashless transactions, rewards, discounted price on shopping, building a credit score, etc. the benefits can be enjoyed as long as the cards are used it sensibly. The moment you start paying less attention towards the usage of credit cards, even the best credit card in UAE can put a dent in your finances.
So, in order to save you from digging a hole of debt, here’s a list of few sloppy credit card habits that you must ditch right now:
- Not Paying the Total Payable Amount
Most credit card providers in the UAE allow their consumers to pay a minimum partial payment. This minimum amount is generally 5% of the Current Balance or AED 100/- whichever is higher. However, you must understand that it’s not okay to pay just the partial amount. Every time you pay the minimum payable amount, you pay only a part of the interest and your credit utilisation increases every month. This, in turn, puts you in a never-ending debt and will also create a negative impact on your credit score.
- Not Reading Your Credit Card Statements
With a number of bills coming in the mail every month, looking at every single of them could be difficult, time-consuming and boring. However, it is not advisable to pay the bills without reading the statements. This is because even the statements of the best credit cards in UAE can bill unauthorized credit card charges, or show billing errors.
- Not Making the Timely Payments
When you can schedule your credit card payments in advance, there’s no excuse to miss your credit card payments. If you are continuously missing the deadlines, you must stop it right now. This is because delayed payments result in late payment charges, high interest rates and a very bad credit score.
- Not Paying Attention to Your Spends
The best credit cards in the UAE help you survive even when your savings account dries up. They help you make big purchases but, buying things though credit card that you can’t afford is one of the worst credit card habits that you must break immediately. As per the experts, your expenditure through a credit card should not exceed 50% of the total available balance.
- Not Using Credit Cards
Not just overspending with a credit card is a bad habit; letting your card go unused is also the same. If your credit cards go inactive for a long time, with several credit scoring formulas, your credit score can be put in danger. Moreover, credit card providers may even cancel your card if you haven’t used it in the past three to six months.
- Not Thinking Before Using Cash Advances
A credit card offers you an advantage to access cash during times of emergencies. However, relying on a credit card for cash is not advisable at all. This is because cash advances are one of the most expensive types of credit card transactions that are linked with the highest interest rate, no grace period and a cash advance fee.
- Not Preferring Debit Card over Credit Card
Unless you are interested in collecting reward points, pulling out your credit card instead of your debit card is a bad choice. A credit card should be used only for occasional and big purchases. For your everyday spends, a debit card should be used as it is your direct access to the fund, leaving minimal or no chances of overspending.
Hard to accept, but bad habits are easy to fall into and once you’re stuck, it’s next to impossible to break out of; credit card habits hold no exception. So, before your credit score becomes too low start analysing your expenses to replace the bad habits with the better ones.
