With hundreds of options, finding the best credit card in the UAE can be challenging. bayzat can help you compare credit cards from UAE banks by interest rate, offers, fees, rewards programs and much more. But to make the right decision, it is important to first understand credit card interest rates and rewards programs. The overall cost of holding a card is significantly impacted by the benefits and rewards that come with it.
Acquiring a credit card often comes with a “signing bonus.” This can be in the form of attractive offers upon spending a certain amount within the first couple of months. If you are able to pay off your credit card bill at the end of each month, then this may be an attractive option, if not, it may turn out to be more costly in the long run with interest accruing monthly on the unpaid balance.
Also watch out for joining fees when acquiring a new card, especially if you are signing up for an Airmiles rewards program.
There are typically three types of rewards programs offered on credit cards in the UAE: Rewards Points, Cashback and Airmiles. Nowadays, it is rare to find a credit card without any rewards or benefits. Of over 200 cards analyzed by bayzat.com, 58% offered Rewards Points, 29% provided Cashback, and 19% came with an Airmiles reward program (some cards offer more than one type of rewards program).
The current average annual interest rate on credit cards in the UAE is 34%. While the average interest rate for a card with a rewards program is approximately 35%, credit cards with no rewards have an average rate of 26%.
The type of rewards program has a large impact on the annual fee. The average annual fee for classic & gold cards (those with a minimum monthly salary requirement of AED 7,500 or less) is AED 175. However, the average annual fee is AED 375 for cards with Airmiles rewards. There are still plenty of options if you’re looking for credit cards with no annual fees in the UAE, with approximately 30% of cards having no yearly charge.
Additional benefits such as airport lounge access, concierge services, credit shield and other perks usually mean a higher annual fee as well.
Read the Fine Print
Reading the fine print can be annoying, but with credit cards it is very important. Often times there can be caps on rewards or minimum spending requirements. Sometimes, you may even lose rewards points for missing a payment.
Getting a credit card can be useful in managing your overall cash balance. However, it is important to be mindful of the different pitfalls that could arise from having them. No matter the card you choose, paying off your monthly balance is the best thing you can do for yourself.