Most people swipe their credit card or tap their phone without thinking. However, many misunderstand how credit card interest in the UAE really works. This lack of awareness can lead to costly mistakes.
Let’s start with interest rates. In the UAE, monthly credit card interest rates usually range from two to four per cent. That equals 24 to 48 per cent annually. Meanwhile, most savings accounts only offer around five per cent. So, credit card interest is much higher than what you earn from saving.
One major misconception surrounds when interest begins to apply. Ideally, you pay your full balance every month. If you do this, you avoid interest entirely. But many people cannot always do that.
Sometimes, people only pay part of the bill or the minimum amount. Unfortunately, this does not stop interest from building. The moment you fail to pay in full, your credit card issuer starts charging interest.
Next, credit card interest UAE understand grace periods. These last from 21 to 25 days after your statement is issued. You must pay your full statement balance during this time. Otherwise, interest will be added. Worse, the interest is charged from the original purchase date, not just from the due date.
Cash advances come with even more danger. You get no grace period on these. Interest starts the second you take the money. Also, you often pay a higher rate plus a cash advance fee. This makes cash advances one of the worst uses of a credit card.
Instead of cash advances, consider personal loans or overdrafts. Some banks, like Wio, offer Easy Cash options. They allow borrowing with more manageable daily fees. But always compare before deciding.
Then, credit card interest UAE make it a habit to check your statements. Many people skip this step. However, it helps you spot mistakes or fraud. You can also keep track of hidden fees and penalties. This helps you control spending better.
Also, choosing the right card matters. UAE banks offer hundreds of cards with different perks. Some reward online shopping, travel, or groceries. Others offer air miles or cashback. So, select one that matches your lifestyle.
Besides that, foreign transaction fees are another trap. credit card interest UAE Some cards claim they are good for travel, but charge up to three per cent per transaction abroad. Always choose cards that have “no FX fees” if you travel often. Also, pay in the local currency while abroad to get better conversion rates.
Promotions sound great, but often have strings attached. A no-annual-fee card might start charging after the first year. A zero-interest deal might add interest later if you don’t pay the full balance in time.
Notably, always review the terms and conditions. While it’s hard to read everything, you should look at the “Key Facts” summary. Some banks now provide videos to explain the small print clearly.
For example, credit card interest UAE World credit card advertises 10 per cent cashback. That sounds amazing. But you must spend Dh10,000 each month to qualify. Not everyone can meet that spending level.
To conclude, always study your options before picking a card. Check the interest rate, fees, perks, and payment terms. By understanding how credit card interest in the UAE works, you can make smarter choices and avoid surprises.
