It seems that the global trend of substituting cash with plastic money is catching up across the UAE, as revealed by a recent survey conducted by compareit4me.com, the UAE-based finance comparison site.
According to the survey there is a rise in the number of people making debt repayments using a credit card. The respondents admitted to receiving weekly calls from banks offering credit cards and succumbing to accepting their offers to subscribe to the offers.
Of those surveyed, 20 percent said they have made a loan repayment using a credit card, whilst another 45 percent said their monthly debt repayments were beyond their means. Some respondents (37%) said they had three or more credit cards, and over 50 percent of those with three cards or more, said they had used over 90 percent of their available credit.
Many respondents (42%) admitted that they only made the minimum payment on their credit card each month. This implies an individual paying only the interest, which means the debt never decreases and can be a cause of concern for those undergoing financial difficulty.
As revealed by the survey results, a number of individuals had attempted to save money by transferring a balance from one card to another, only then to fully utilise both credit cards leaving them with double the debt.
Tom Davies; “The results found in the survey were a big concern. We found worrying trends with large portions of the respondents; trends which meant people were accumulating debt quicker than they could afford.
Credit can be and often is a positive thing but only when used responsibly. Anyone considering credit facilities should think carefully about the monthly repayments and the total value of the debt.
Perhaps most importantly of all, anyone taking out any kind of finance should compare all the available products from a range of banks to make sure they are getting the best deal and the best fit for their personal needs.” — Tom Davies, Operations Manager at compareit4me.com
Tips to manage your Credit Card
- Pay your balance amount in full. Credit cards interest rates are high but rates often seem low, due to complicated calculation methods and service charges.
- Don’t apply for too many cards. If you cannot afford to pay balance of one card, then having more cards will certainly not help. Limiting your cards to one or two also helps to better manage your finances.
- It makes a lot of sense to get your credit card from where you bank. Apart from being able to view all your accounts in one single place, you can set up automated payment to at least make the minimum payment on time and avoid penalties.
- Don’t fall for the card company’s marketing hype. Credit card perks and rewards are fine. But these are of no use if you cannot pay off what you spend!
- Review your monthly statements. It is important to save your receipts and compare them with your card statement to ensure an accurate monthly statement. Also, make a note of your expenditures to check if you’ve been spending more on unnecessary items.
- What can you afford? The big question to ask yourself before making any large purchase is; Can I afford it? It may be prudent to put yourself through a waiting period before actually making the purchase. Remember, a large purchase will need to be paid off sooner or later, and you want to make sure you’re paying the lowest amount of interest on your credit card(s) as possible.
- Start saving. Not exactly a tip for managing your credit card. But, build your savings habit. Always think of your credit card as an emergency ‘tool’ to help you get through a difficult short-term financial hardship.