What is the best strategy to control maxing out credit cards in UAE?
To some people, credit cards are a handy part of life and to others, a route to debt that can cause major problems. MoneyMall takes your enroute at how a credit card in UAE works and how you can control maxing out your credit cards.
How can you control maxing out credit cards in UAE?
Here are a few handy tips that you can follow if you have a credit card in UAE to control maxing out your credit card and have a high credit score UAE:
- Avoid the minimum payment trap. Rather pay as much as you can each month.
- Do not withdraw cash from your credit card as the bank charges on withdrawing cash are ridiculous.
- Work out exactly how much interest you are paying on your credit card. It might help you to think twice before making your next purchase.
- Freeze your credit card if you are an impulsive buyer and know that there is a sale coming up.
- Leave your credit card at home at times. Not having it with you reduces the temptation of using it.
- Always pay your credit card bills on time. You are penalized for late payments.
- Avoid creating recurring payments on your credit card.
- Double-check your statements to make sure that all the transactions were correct as well as to see where your money is going.
- Use the snowball effect to pay off your debt. Start with the smallest amount and once it is repaid, use the money you are saving to pay off the next smallest amount. This way you are building momentum in paying off your debt as well as creating small victories for yourself.
- Create a budget for yourself and stick to it. Make sure that you include money to save for expensive items.
What to do when you have maxed out your credit cards?
Even if you have the best credit cards in UAE, if they are maxed out, they can damage your financial situation for years to come. So, here are a few steps that you should follow if you have reached the limit on any or all of your credit cards:
- Set up a bare necessities budget that covers your rent or mortgage payment, your utilities, food expenses, and transportation costs.
- Cut out entertainment expenses and your clothing allowance for a short period of time.
- Find extra money or a second job to pay down your credit cards.
- Create a debt payment plan. For multiple credit cards with high balances, focus on reducing one balance at a time as this is more effective than trying to pay them down all at once.
- Opt for a credit counseling or debt settlement service if you are having a difficult time paying off your debt.
It's not that you can't make large purchases on your credit card. Using your credit card for large purchases allows you to accumulate rewards, meet the requirements for a sign-up bonus, or take advantage of a promotional interest rate. Of course, if you do not choose one of the best credit cards in UAE for yourself, there may be situations where even though your credit utilization ratio is low, your authorized limit is just not high enough to allow you to use your credit card for your desired purpose. In such cases, you can request that your card company increase your limit.
However, always make sure that you keep in mind that carrying a high credit card balance carries a number of risks from damage to your credit score UAE to less access to your credit limit. Increasing your monthly credit card payment will lower your credit card balance faster and prevent you from maxing out your credit cards.