Credit cards, unlike debit cards, come with a number of associated charges, and the great majority of people are either unaware of them or choose to ignore them.

However, these fees and charges, together with the interest rates, can continue to increase over time and end up becoming a large pile of debt. From which some people may be unable to escape.

It is, therefore, imperative to have a full understanding of all the fees and charges associated with your credit card so that you can avoid getting into serious debt.

Financial literacy in the United Arab Emirates is relatively poor, with many nationals not even aware of how much in the way of interest rates they have to pay on their credit cards – an alarming fact given that UAE interest rates are actually considerably higher compared to other countries.

The normally advertised interest rate is the monthly figure, which can turn into a staggering amount when compounded over the course over a full year, but there is some good news in that there are a number of tips that can be followed in order to avoid falling into debt or paying incredibly high interest.

All credit cards in the UAE come with a 20 to 30-day grace period from the time of purchase, so if you pay back the full amount within this time, you will not be charged any interest.

You should avoid falling into the trap of just paying the minimum amount, as while it might seem like a good idea at the time, in the long term, it can result in you accumulating a massive amount of debt.

There is an annual fee for all credit cards in the UAE, with the amount normally dependent on the particular card you possess, with high benefit cards coming with higher charges.

Many people forget about this charge since it only comes once a year, but it can affect your statement in a major way.

Although there are a few cards that are advertised as having no annual fee, it should be kept in mind that this may only be for the first year, and in order to avoid this happening, you need to ensure that you get a card where the waiving of the annual fee is for the lifetime of the card.

In the event that you do get a credit card with an annual fee, it is crucial to be aware of the exact amount that is charged in order to be certain that you will be able to pay it.

Credit cards are not intended to be used to withdraw cash, and will result in ‘cash advance’ charges, which are normally between 2% and 3% over that of the withdrawal amount, or ‘cash in advance’ interest, which is charged from the withdrawal day, also at around 3%.

Personal loans are a better option for a cash requirement in an emergency.

All credit cards have limits, and exceeding those limits results in charges.

Using an UAE credit card overseas will incur a foreign transaction fee of around 1.5% to 4%.

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