Did you know that the first credit card was invented in 1949 when Frank McNamara, founder of Diners Club, forgot his wallet at dinner, and his wife had picked the tab for him, which led to a Eureka moment of creating a multipurpose card and avoiding future embarrassments?
With their ubiquitous usage, credit cards now have a litany of benefits to offer the GenZ generation. Just as students do a ton of research before filling out a college application, applying for a credit card is no different. Who wouldn’t want to avoid the hassle of meeting all your monthly and daily requirements without worrying about an empty wallet? Before you jump on the credit card bandwagon, it is of utmost importance to select the best credit card in Dubai.
Consider 2 Factors before choosing the credit card
Every one of us requires a credit card, but most importantly, it is an important financial tool for students who are on the cusp of a great life ahead, and meeting college and living expenses are a vital need for forging a brilliant career. As a student or a young professional, the highest priority is getting cheap credit. Think twice before committing to a credit card.
1. Interest Rate
First-time credit card applicants have a higher probability of carrying their balance to the next month. Going for a reasonable initial rate helps to avoid the payment of thousands of rupees in the future. As a side note, when carrying a credit card balance is unavoidable, make the minimum monthly payments consistently. Failure to make monthly payments will have a deleterious effect on your credit score and will preclude you from enjoying attractive financial credit products such as loans and competitive interest rates in the future.
2. Annual Fee
Ask yourself this. Will the credit card be used for daily charges or for select occasions? If the latter is the case, then it is best to go for a credit card with zero annual fees. Reviewing the purpose and analysing the daily spending will help you decide when the rewards outweigh the annual fee cost.
What is the best credit card offers to look out for?
Frequent Flier Rewards
Your aspirations of going to your dream destination will come true effortlessly without huge financial baggage using the Air Miles offers on credit cards. If you want to get the maximum return for your valuable rupees, consider using a combination of branded travel programs with frequent flier rewards. Understand the fine print on the flier programs as miles tend to accumulate in different ways between travel brands and issuers.
0 % Balance Transfer
If you have an excellent credit history and looking to pay off high debt, then availing of a 0 % balance transfer during the promotional period is awesome.
Be aware of the balance transfer fees charged by most credit card companies. Reading the fine print helps to avoid financial woes after a few years. Also, keep a tab on the transfer fee and interest-free time periods. An ideal credit card always offers a splendid honeymoon period while limiting the fees to a minimum.
Best Cash Back Offer
Admit it; we are always gravitating towards the best cashback offers across categories such as grocery stores, gas stations and listed retail outlets. Many of us don’t know that higher percentage cashback winnings have caps. Understanding the T&Cs before committing to a credit card makes financial sense. Always keep in mind that the interest rates on cashback offers tend to be higher. Credit card companies need to turn in a profit for maintaining their existence, but it’s up to us to use the credit card in a financially viable manner.
Best Points & Rewards Offer
Point-based rewards programs are an underrated feature of credit cards. In addition to hefty benefits, you can get discounts on travel, signing bonuses and the latest merch.
How to use a credit card in the right way?
Excess to anything is not advisable. While some consider credit cards to be an instrument of doom leading to further debt, the practical fact is that credit cards offer you the financial freedom to live your life to the maximum extent when used in moderation and with a plan.
Keep a tab on your purchases frequently
You should periodically evaluate the credit card purchases at least once a month. But why is this useful?
For starters, you can avoid being a victim of fraud. Cybercriminals perpetrate theft on unsuspecting credit card users. Maintaining adequate security is a job half done when it comes to optimal usage of the credit card.
Analyse your spending behaviour
Being aware of your own purchases creates the right financial mindset in the future and helps you get low-interest rates, higher limits and rewards. Utilizing a spending tracker sets a definitive plan for analysing your credit card transactions and not being carried away by momentary urges.
Get the Credit Limit enhanced once a year
Be proactive in asking for a raise in the credit card limit every year. Doing so expands your horizons towards more quality purchases and positively reflects your credit score. Make sure to ask the credit card company whether your credit enhancement request will entail a soft or hard credit inquiry. When you are in the initial stages of your credit journey, it is prudent to stick to soft pulls. Do not shy away from a hard inquiry as your financial journey matures. Just be aware of the dynamics of maintaining a balance between credit score and your immediate needs in life.
Final Takeaway
A credit card is an ultimate choice to augment the efficacy of your personal finances. But with great power comes great responsibility. Take a strong personal stand that you make the credit card journey in a disciplined way. Be aware that credit card companies make a profit of your mistakes
Remember, the path to your financial freedom is like a red carnation. It can give your financial freedom just like its fragrance but can also give a thorny sting if you are careless or just plain ignorant.