When used right, a credit card can be a valuable asset to anyone’s finances. However, there are number of things you should do as a matter of course if you have one, so that you stay on the right side of the tracks with your card management. Used well, they are a helpful and useful tool, but you need to be vigilant and sensible in how you use it, as there can be serious repercussions if you don’t – the UAE is renowned for clamping down seriously on debts.
So here are a few handy tips on how to manage your credit card better:
Take care using it when travelling internationally
Foreign transaction fees can be as much as up to 3%, which can really sting when you get back off your break. However, there are cards available without these fees – so avoid cards that have foreign transaction fees, and protect yourself from racking up a massive debt. It can be tempting to use your credit card more freely when you’re abroad, but if you travel a lot, then having fees added on top of purchases means it can easily mount up to 1000s AED annually.
Manage your monthly repayments better
Make sure you pay off the balance in full each month. Interest rates can be severe and many people find that they have debts due to those in the long run, rather than their purchases. So keeping on top of monthly repayments as you go along will prevent the interest racking up.
Try to pay by cash where you can
If it’s only a small purchase, then rather than just relying on your credit card you should aim to pay for whatever you can by cash. If it’s not something you need and you can’t afford it right now, then go without. It’ll be much better than letting your debts mount up for something inconsequential.
Sometimes we think just because we have plastic that it allows us to buy small things that we’d otherwise go without – just because we can. But that’s totally the wrong way to use credit cards and will get you into a whole heap of trouble with that mind-set.
Try to have a savings fund
If something terrible happened and you lost your job, or needed private medical or dental care quickly, or had any other form of emergency, you could end up maxing out your credit card just because you simply don’t have the money upfront yourself. And this could put you in a seriously dangerous position.
So starting to save some money to put away for a rainy day could be the difference between surviving a crisis and getting into serious debt. A credit card can be a great source of income when you don’t have the cash now, but can’t wait till your next pay cheque. However, if you use it irresponsibly, or don’t put a contingency fund in place at the same time, then it can be risky.
Make sure you can make the repayment
A mistake a lot of people make is buying things when they have no idea whether they’ll be able to make the repayments. In short, you don’t want your credit card to be your sole source of income, as if you know you may not be able to keep up with the monthly repayments, then that’s where the trouble starts.
Avoid late payments
You will end up with the dreaded late payment fees, higher interest rates, and problems getting other credit. So just be organised and make sure you pay your balance off each month on time.
Keep within your credit limit
If you don’t stay within your limit, it’s simple – you will incur a cost. If this is the something you do regularly, then you should speak to your bank about possibly increasing your limit because your current card is not serving its purpose in providing you with a secondary source of income that you can manage easily.
If you need a larger amount of money that you would prefer to pay off over a longer period of time, then loans would suit your needs better.
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