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Be a smart spender

Advantages of credit cards are in plenty and banks and financial institutions in the UAE make sure that plastics are fantastic Advantages of credit cards are in plenty and banks and financial institutions in the UAE make sure that plastics are fantastic

Credit Cards come in very handy to carry around instead of cash. It can be used to buy goods, pay grocery/utility bills, get discounts at restaurants, for international travel, pay insurance premiums or recharge credit on mobile phones. You have lifestyle privileges as well such as airport lounge access and discounts in stores. The advantages are plenty, and banks and financial institutions in the UAE make sure that plastics are fantastic with added benefits like insurance coverage on purchases and life insurance. However, it is important that one be a 'smart spender'.
If you can control your spending habits, then it is a very 'easy to use' financial tool. Smart users give standing instructions to the bank to deduct the full outstanding amount on the credit card at the end of each month. This way they will not miss out on the payment date and can avoid the fines. Smart shoppers should avoid getting into a spending spree especially during sales and attractive offers by retailers, which seem to be perpetually present in the UAE. A definite 'No, No' is drawing cash from your card. I remember once I used the credit card by mistake to draw money from the ATM instead of my debit card and immediately Dh100 was deducted then as the fee. After this incident, I make sure that I am using the right card. Over time, I've even got cash returns from its use. Perhaps a strict upbringing where we were taught to "cut one's coat according to one's cloth" has helped me in living a prudent financial life making both ends meet.
However, many people in the UAE get sucked into spiralling credit card debt. Once you have a job and your residence visa is stamped, banks and financial institutions call up individuals with irresistible offers. When interest is referred to as 3 per cent, the unsuspecting user does not realise that it is 3 per cent per month, which works out to 36 per cent a year on the outstanding. If you have been using the credit card regularly, then banks tend to increase your credit limit tempting you even more. Many people get used to paying the minimum outstanding every month with interest getting added to the principal amount.
As you continue your stay in the country, 'Wants' in the UAE keep on increasing and people who lack willpower keep on spending. Losing a job is a nightmare for expatriates. As a result, balancing the budget gets difficult. You tend to spend on your credit card hoping to pay back in time yet find your credit card outstanding multiplying till you cannot pay back, and it becomes a criminal case years down the line. However, to help such customers some banks in the UAE restructure the loan and credit card outstanding to fixed monthly amounts to be paid back to the bank. 
There have been cases where the banks bounce the security cheque of defaulters, and a criminal case is thrust upon the offender. Some people flee the country unable to meet their commitments. Some other banks leave it to collection agents who telephone unsuspecting family members and threaten them with dire consequences if the debtor flees the country with pending credit card payments. This method causes undue stress to innocent family members who are caught in the debt trap. So here's some good advice to you, please use your credit card wisely. Save your family members mental torture. Finally, you are responsible for all you spend. It is your life. Your choice. 
- suchitra@khaleejtimes.com