The lure of plastic money is steadily rising and UAE is slowly inching towards becoming a cashless economy. Residents are increasingly relying on credit cards in UAE to pay bills, airfares, hotel bookings and various other miscellaneous expenses. As per the data survey gathered by Network International, the expenditure on credit cards issued by UAE banks rose 15.9 per cent year-on-year and accounted for 79.3 per cent of the total point of sale transactions. However, the rapid increase in credit card applications and spends doesn't come as a surprise. This is because credit cards offer attractive discounts and various benefits and privileges that other payment means do not. Credit cards are available in a wide variety of options to suit various spending habits. You can choose from various credit card categories like cash back credit cards, reward credit card, travel credit cards, card etc. Each type of credit card offers unique rewards and benefits that can make spending more rewarding. To give you a better picture, we have listed down some pointers that have contributed to the rise of credit card payments in the UAE.
Top Reasons for the rise in Credit Cards Applications
Credit Cards help build a good credit history
In the present time and age, having a good credit score is essential. Right from obtaining loans to securing an apartment for rent, a good credit history can make your financial life easier. Using credit cards are perhaps one of the easiest ways to establish a good credit history. By charging small amounts on a credit and paying them on time, you can easily establish a good credit score.
Great source of emergency funds
Financial emergencies often strike without warning. In case you don't have enough funds saved in your savings account, credit cards allow you to borrow whether you need to buy an emergency airline ticket or pay for some repairs, a credit card can be a great source of emergency funds.
Attractive Rewards
Credit cards offer attractive rewards such as cash back, airline miles, discounts, gift cards and much more. These rewards are enough to get anyone hooked into using credit cards as much as possible. By using credit cards, you can save a lot of money on rewards and benefits. Some credit cards also offer large signup bonus rewards, which can save you hundreds of Dirhams.
Safety of transactions
When you pay using a credit card, it's easier to avoid losses from frauds. This is because; the money is deducted from your credit card account and not your savings account. Once you learn of the fraudulent transactions, you can immediately report it to your credit card company. The credit card company will reverse the transaction on confirming the fraud and the money will be restored to your account while the bank investigates.
Credit-free period
Unlike debit cards, credit card purchases do not reduce your checking or savings account balance right away. The money remains in your account until you pay your credit card bills. Consequently, you can hang on to it for some extra time, which can help you in two ways. First, you can benefit from the time value of money in your account i.e. you can earn interest on your money during the credit free period. Secondly, postponing payment makes the purchase lighter on your pocket.
Clearly, credit cards offer plenty of financial benefits and hence credit card spends are bound to rise exponentially in the future. So if you don't have one, apply for a credit card today and discover a more rewarding way to spend.
The views expressed here are those of the authors and do not necessarily represent or reflect the views of Citibank UAE