The credit limit is a very important aspect of credit card ownership in the United Arab Emirates.
This limit puts a cap on the amount of money that can be spent using a credit card.
The limit can be different on different credit cards and for different people.
There are a number of factors that are considered in determining a credit limit in the UAE, including the income of the credit card holder, spending habits, and payment history.
Different people spend different amounts of money – some people live a very lavish lifestyle, while others try to do things more in moderation, and some people prefer to live as frugally as possible.
Credit cards with a higher credit limit offer a number of advantages but also pitfalls.
One obvious advantage of having a higher credit limit is that people have more money to buy more things.
This allows individuals to make larger and more expensive purchases, something that can be both helpful and detrimental.
Some people dislike spending their existing money on the likes of electrical equipment and gadgets.
Store financing is one option for those people, but it does mean the commencement of yet another line of credit, which is something that few people really want.
A higher credit limit can be a good thing in scenarios such as these.
A higher credit limit also offers a form of insurance in the event of an unexpected financial crisis.
These crises can occur when expenses become more than were planned for or expected.
Emergency situations such as medical bills, property damage or car repairs often cause these crises.
A higher credit limit can be good to have as a last resort in such circumstances.
However, there also some disadvantages to having a higher credit score in the UAE.
The most obvious pitfall associated with a higher credit score is that it is likely to result in a much higher amount of debt that needs to be paid back.
Credit cards are very easy to use, and sometimes that convenience makes it difficult to stop making purchases even though it would be best to do so financially.
Unless every monthly balance on the credit card is paid back on time and in full, a certain percentage of interest will be charged on the amount spent.
If a credit card holder goes over their credit limit for the month, then there will be further charges to pay beyond just the amount that was borrowed.
An increase in credit score also makes it easier to get other credit cards or loans.
There are many tempting offers from UAE banks that can be difficult to refuse, but this can cause more debt and an overreliance on credit cards.
A false sense of security can also be generated by having a higher credit score.
Those who do not take strict notice of their spending habits can easily fall into a financial trap.
It is crucial to be well informed and financially responsible in order to avoid the pitfalls associated with having a higher credit score.