The use of credit cards is the norm in the United Arab Emirates today, providing relief during emergency situations and financial solutions, including being able to pay off big purchases over an extended period of time.
However, sometimes people use credit cards too much and end up finding it difficult to repay the amount they have spent, which can result in them getting into debt, especially if the occasional payment is skipped and the debt begins to increase every month.
Being in debt puts people under tremendous pressure, with endless calls coming from credit card issuers as well as emails about outstanding debts and even legal notices.
This could also cause situations that result in even more debt in the future.
It is therefore crucial to avoid making decisions that could worsen the situation when you are already in credit card debt.
People should never mortgage their home as a way of getting out of credit card debt, as this only creates new debt and creates the risk of actually losing your home if even a small mistake is made.
House demand in the UAE is always extremely high, and to lose a home that has been mortgaged is not only an enormous blow, but can also make it even harder to pay rent and just be able to afford the necessities of everyday life.
Sometimes, family and friends may offer money to help you get out of credit card debt.
However, it is inadvisable to take them up on any such offer and should be the last option if all other avenues have been exhausted.
A positive element of borrowing money from friends or family is that they are unlikely to charge interest on a loan, but the downside can be strained relations and friendships if you end up finding it difficult to pay back that loan as quickly as promised.
Your credit score in the UAE is a kind of financial resume that tracks all financial dealings, including loan payments, credit card payments and any related defaults.
If someone defaults on a loan, financial institutions in the UAE may choose the loan settlement option, which will give them back the most money.
However, this is not a good move for those in debt as a One Time Settlement will show up in their credit report and have a negative impact on their credit score, making it difficult to get any more loans in the UAE under any circumstances.
Many people also make the mistake of dipping into their retirement savings to pay off their credit card debts, but this should also be avoided.
Retirement is never as far away as people think, and using up retirement savings on credit card debt repayments will result in the loss of years of compound interest, and it is not worth sacrificing your future.
To pay off credit card debt, users need to concentrate on developing more disciplined spending habits, budgeting their lifestyle, and taking advantage of deals and offers until debt has been repaid.
