Credit cards offer convenience and flexibility for managing expenses in the UAE. However, certain spending habits can quickly turn helpful financial tools into sources of serious stress. Understanding which credit card behaviors create problems helps residents avoid falling into debt traps.
Making Only Minimum Payments
One of the most dangerous credit card behaviors involves paying just the minimum amount each month. This approach keeps accounts current but barely touches the actual balance. Interest charges pile up on the remaining amount, causing debt to grow rather than shrink.
The UAE banking system charges interest rates that can reach twenty to forty percent annually on credit cards. When someone pays only the minimum, most of that payment goes toward interest rather than reducing what they owe. A five-thousand-dirham balance can take years to clear this way.
Using Credit Cards for Cash Advances
Withdrawing cash from credit cards costs much more than regular purchases. Banks charge immediate fees for cash advances, often around four percent of the amount withdrawn. They also apply higher interest rates on cash advances compared to purchases.
These charges start accumulating right away without any grace period. Someone who withdraws one thousand dirhams might immediately owe fifty dirhams in fees plus daily interest. This credit card behavior quickly creates debt that grows faster than expected.
Maxing Out Credit Limits
Spending up to the credit limit on cards creates multiple problems. First, it leaves no room for emergencies or unexpected expenses. Second, it signals financial stress to banks and credit bureaus. Third, it means paying interest on the maximum possible balance.
High credit utilization affects credit scores negatively. Banks view maxed-out cards as warning signs of financial trouble. This can make it harder to get loans or better interest rates later. People often max out multiple cards trying to keep up with payments. This creates a cycle that becomes hard to break.
Ignoring Statement Due Dates
Late payments trigger penalty fees and damage credit ratings. Banks in the UAE report payment history to credit bureaus like Al Etihad Credit Bureau. Missing even one payment can lower credit scores significantly and make future borrowing more expensive.
Late fees typically range from one hundred to two hundred dirhams per missed payment. Combined with ongoing interest charges, this credit card behavior adds unnecessary costs. Some people miss payments because they lose track of multiple due dates across different cards.
Treating Credit Cards as Extra Income
Perhaps the most harmful credit card debt behavior involves viewing available credit as additional income. Credit cards provide borrowed money that must be repaid with interest. They are not salary extensions or emergency funds.
Using cards to maintain a lifestyle beyond actual income creates unsustainable debt. This happens when people regularly charge expenses knowing they cannot pay the full balance. Restaurant meals, shopping trips, and entertainment costs add up quickly when charged to cards month after month.
Breaking Credit Card Behavior Patterns
Recognizing harmful credit card behaviors is the first step toward financial stability. Residents dealing with growing balances need to act before debt becomes unmanageable. Debt management services in Dubai and across the UAE help thousands of individuals understand their situations and develop solutions.
