What are the benefits using credit cards?

Credit cards

Credit cards are means of making payments. A credit card is issued to the users and allows them to pay for goods and services based on holder’s promise to pay for them.The issuer creates a line of credit for the customer from which the customer can borrow money to make payments to a merchant or a cash advance to the user. Every bank in UAE issues credit cards with different features and interest rates.

 

How does it work?

When one applies for a credit card they get a maximum credit limit based on their credit history and other factors. The credit card can be used for purchases made in person, over the phone and online. The user receives a credit card statement every month and they can either choose to make the minimum payment or the full amount on the closing balance depending on their financial situation. Interest is charged by the banks for borrowing money or providing credit.  Credit cards incur interest on daily outstanding balances on purchases, cash advance transactions, balance transfers, promotions, interest from previous months and related fees and charges. The user earns reward points for purchases made on the credit card. These reward points can later be traded for cash favors and other favors.

 

Benefits of a Credit Card

Credit cards are a boon for many reasons. Listed below are some of the advantages of a credit card in uae.

• Convenience- Credit cards are more convenient than carrying cash around. Credit cards are easier to carry around and use and all the places from shops to restaurants. They are also beneficial if you are travelling across the country and don’t want to use foreign currency.
• Credit history- Credit cards act as amazing instruments to build your credit history. By making timely payments for your credit card you can build a solid credit history.
• Rewards- You don’t get rewards on the cash that you spend for purchases. But credit cards offer reward points for every purchase made on the credit card. These reward points can later be exchanged for favors.
• No interest charged with Islamic credit cards of UAE: Islamic credit cards like Shariah Compliant card don’t charge interest rates.  Shariah principle doesn’t comply with the idea of charging interest. Hence the bank doesn’t charge interest instead it charges a monthly fee which is very minimal.
• Purchases are easier with credit cards: It’s easier and very convenient to make purchases with credit cards especially online purchases. Credit cards can be used as the mode of payment to purchase products online or plane and train tickets.  It can even be used to purchase movie tickets which will earn you reward points on some credit cards.
• Peace of mind when travelling:  Some credit cards offer benefits such as travel assistance and emergency assistance.
• Credit cards can serve as a boon when you want to buy something but don’t have enough finances to do it at that moment.