What are credit card charges in UAE (complete Guide)?

Unlike debit cards, credit cards come with a variety of related fees. Most of us often do not understand or avoid a full understanding of card-related costs. However, these costs and the included rates may accumulate over time and accrue to Inevitable debt. Therefore, to avoid liability, it is essential to have a clear understanding of all the fees charged on your credit card.

Credit Card Charges in UAE

1. Annual fee
2. Cash Fee
3. Foreign transaction fee
4. Over limit charge
5. Interest rates
6. Late fees
7. Credit shield

1- Annual fee

This is a fee that you need to pay for the card each year. The yearly price you charge depends on the type of card you have. High-yield cards charge more. We usually do not remember this fee because it is an annual fee, but This fee may have a significant impact on your bill. Some cards generally carry advertisements that do not charge an annual fee. Please note that this is usually short-term or only the first year. If you want to avoid this, the UAE also offers a Zero yearly fee credit card. Some tips on annual fees Apply for a waiver of the annual lifetime fee.

Before collecting your card, please understand the annual fee charged and whether it can be paid.

2- Cash Fee

Most of us have forgotten the fact that credit cards cannot withdraw cash, and because of its convenience, we will eventually use it to withdraw some money. Withdrawals via credit cards can seriously damage your bank account. The fees associated with cash withdrawal are cash advances; The cost exceeds the withdrawal amount, usually 2.5-3%. The other fees charged are prepaid cash interest, which is also about 3%. Starting from the date of withdrawal, for urgent cash needs, personal loans will be a better choice. Because the interest rate on personal loans is lower than the cash advance rate. The only tip to avoid these costs is to avoid cash withdrawals unless there is an emergency.

3- Foreign transaction fee

Every credit card comes with a foreign transaction fee, which is charged every time you swipe your card internationally. Although this amount sometimes seems insignificant, it may seriously affect your bill. International transactions usually charged. The cost is about 1.5-4%. Also, there are some costs, such as a uniform conversion fee, which is generally about AED 20-40.

Tips about this fee:

• If you travel frequently, choose a travel credit card.
• Know the cost and try to use your international prepaid travel card abroad.
• Never use your credit card to withdraw cash internationally, it is best to use a debit or prepaid card.

4- Over limit charge

All credit cards have a credit line. Exceeding this credit line not only attracts excess fees but also affects your credit score/scoring. When you need debt, this will have consequences, as banks place great emphasis on credit ratings before lending. However, if you think the credit limit is sufficient to meet your needs, you can contact the bank at any time to increase the credit limit. This will also have a positive impact on your credit rating because it means that you have a higher credit level. But remember, only if you are willing to pay in the case of so many amounts, the credit limit should be increased.

Tips for maintaining credit check:

• Always check your expenses.
• If necessary, increase your credit limit, but do not exceed the set limit.
• Always pay off the balance to avoid high-interest rates.

5- Interest rates

The level of financial literacy in the UAE is low. Most UAE nationals are unaware that they are paying interest rates on credit card bills. Because the UAE charges much higher rates on credit cards than any other country in the world, these very compelling people are shocked. The interest rate that is usually advertised or communicated is calculated every month. When compounding for a year, the interest rate can reach a surprisingly high level. For example, if you get a card with an interest rate of 3%, you are told that this is the monthly rate, the annual interest rate of the card will be 3 * 12 = 36%. Credit cards usually charge an interest rate of 2.5-3% per month.

However, to avoid paying high interest or reducing debt, here are some tips you can follow: Each card has an interest-free grace period; please make sure you spend the full purchase time during this period, usually 20 to 30 days. Avoid paying only the minimum amount; at the moment, this seems to be alleviating, but in the end, it will leave you with huge debts.

6-Late fees

Usually, the payment due date is provided on the credit card to pay the bill. The cardholder should pay the full or minimum debt before the due date. If the payment is not made after the due date, or the payment amount is less than the minimum amount, then Late fees will be charged.

7- Credit shield

Credit cards have a function called “Credit Shield.” If the bank card holder suffers any unpredictable situation, such as unemployment, traffic accidents, etc., credit protection is an insurance that will pay the outstanding balance of the card. Some banks in the UAE charge an iconic fee on their credit shields, while others offer it for free or set it as an optional feature. These are some necessary fees that apply to each credit card. To avoid debt, it is recommended that you fully understand the fees charged on your credit card. If you find some difficult prices, be sure to clear them with your service provider. Credit cards may be the best financial source.

These charges may vary for different banks. It is advised you compare credit cards from various banks and choose a card that suits you the best.