Buy Credit Cards, But Understand The Fee Structure

People are often excited at the prospect of owning and using a credit card – but they must be cognisant of the fees and charges therein.

Credit card usage is on the rise in the UAE. With banks easing the minimum salary requirement for both conventional and Islamic credit cards, buying a credit card is now within easy grasp of most UAE residents.

However, credit card application is the easy part. The slightly difficult part is understanding how credit cards work. For starters, most people are unaware of the fees and charges that banks levy on credit card usage. They are enamoured of such terms as ‘free credit card’; these are often ‘free’ for just the first year of usage, after which the usual charges are applicable. Others are unsure about how much interest is being charged on the credit card, or whether interest is charged at all. Most conventional credit cards are charged interest over 2.99% per month, while Islamic credit cards are normally charged a monthly fee in the range of Dh 500.

Not knowing these figures and calculations can be worrisome. Thus, customers are extremely puzzled when they receive their credit card bills at the end of the month and cannot understand some of the terminology used and how certain calculations were arrived at.

Instead, it is wiser to ask the bank all the relevant details about the fees and charges tacked with the credit card before purchasing it. The bank can lay out all the commercials with the card and explain the interest rate, how it is calculated, the credit limit, upper limit for usage, payment and bill cycle, annual fees (if charged), etc. It is better to have all the information before purchasing the credit card, rather than being surprised by large bills at a later date.

Credit cards are being offered for purchase with minimum paperwork. Banks take a few hours to verify the documents uploaded with the credit card application (residence proof, income proof, bank statement, etc.) and the applicant is informed when the verification process is completed. The bank then sends the credit to the applicant’s home within a few days, with supporting documents about the card’s fees, usage instructions, etc.

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