All you need to know about applying for a credit card in UAE

A credit card is an essential part of day-to-day life for many people. Not only has it become a necessity for families and single individuals, but it has also become a convenient tool for managing personal finances.

Credit cards can give you the power to turn dreams into reality. Having a credit card, such as Visa, Mastercard and American Express, can help you buy or build your dream house, help your child go to college, or take you anywhere in the world. Almost everybody can benefit from a credit card, and the application process is as easy as filling out an ordinary application form. But signing up for a prepaid credit card in the UAE doesn’t always go smoothly, so knowing the facts before you start can be very helpful.

Many people lost their jobs during covid and wanted some kind of payment method wherein they could support their day-to-day expenses and wouldn’t have to pay it all back in one go. Credit cards came as a life changer during this time, and it has been seen that there was an increase of 22% in the usage of credit cards during the covid time. More and more people realize that if they plan and use credit cards, they can make good profits by shopping during sales and other festivities.

Following are the things to keep in mind while applying for credit cards in UAE

  • Annual Fee – Most credit cards come with an annual maintenance fee which is quite low. However, customers should read all the terms and conditions and understand how much the annual fee is applied to each card. There are different types of cards, and one should not end up paying extra for the bills they didn’t even subscribe for.
  • Interest Rate – This is one of the most crucial things the customer should check while applying for a credit card through the bank. Most banks have a fixed interest rate on the amount the customer takes through credit cards. For some premium cards, the interest rate is quite low, which could be quite good for customers if they shop in bulk, and this could also lead to a good amount of savings. If the customer cannot pay back the EMI on the fixed date, then the interest rate goes up. The customer should very well be aware of the new revised interest rate if that happens.
  • Cash Advance – Customers applying for a credit card should know the cash advance on that card, which means the amount that can be taken from an ATM machine using credit cards. Mostly the amount is set low so that in case there is a theft, not much money is lost in this process.
  • Salary – Credit cards are easily issued to salaried people and if you have a good monthly salary, then acquiring a credit card is not hard. However, before applying, one should check what is the minimum salary requirement from the bank for issuing a credit card. Many banks do not give out credit cards to people who have just started their work life as they do not have a good credit score.
  • Credit Limit – In the early stage of acquiring a credit card, the credit limit is quite low. However, as the customer uses it on a daily basis and pays the bill on time, the credit limit on their card is increased by the banks. However, it is better to go for a card with a high credit limit right from the start to help with your daily needs.
  • Documents which would be required by banks – A customer who wants to avail credit card should have the following documents in hand – Application form, copy of the passport, 3 months bank statements, current salary slip from the employer, copy of labour card or a copy of EIDA application form.

Few tips for first-time credit card users

  • More purchasing power – Since customers can even afford high-end products with credit cards, the purchasing power of the customers has been significantly higher. However, the customers should always keep a tab on their expenses; when it is time to pay the bill, they would go into debt along with the interest rate the credit card companies charge.
  • Pay full outstanding amount always –It is better to pay the full outstanding amount every month; else, an additional interest charge would be applied on the remaining amount, which would take the total sum to a much higher rate. One of the best ways to make sure you pay the full amount is the auto debit option from your primary account. This way, a customer won’t forget to pay their bill, and there won’t be an additional charge.
  • Maintain a good credit score – Maintaining a good credit score helps you take your credit limit higher and helps the customer avail of personal loans or home loans at a much faster rate. A credit score of more than 800 is considered quite good in the financial world.

There are many banks and financial institutions around the world offering credit card services. Having credit card service will surely help you save a lot in the long run. Many Gen Z and Baby Boomers are now becoming the prime customers for both online and offline platforms, and they prefer credit card service as it is easier for them to acquire and does not require them to have lump sum cash for buying stuff. So, if you have not applied for credit card service, this is the best time to get in as more and more businesses are getting into this with good opportunities. Credit cards will surely help you to save a lot if used in the right way.

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