There’s too much conflict when it comes to the proper usage of credit cards and as the internet suggests, with everyone having a different mastery of it, people are perhaps overlooking what’s actually right and wrong. Given that the youth is jetting at speed to make more money, save more, and double their savings, experts highlight how these practices only lead to more chaos in their financial outlooks.
“Instead of seeing monetary benefits, it’s better to understand your requirements. In the UAE market, credit cards are growing. While some have more than 7, many also have 10 and it’s very hard to manage,” said CA Ankit Attal, Assistant Manager with Dubai Holding.
He added that people generally with above AED10,000 salary, are grabbing 6-7 cards, given the cashback offers.
“Many agents promote credit cards by highlighting the cash-back offers, but they often fail to mention the hidden aspects behind these,” said Ankit.
For example, while a card may offer 5% cash back, they rarely disclose that you must spend a minimum of AED5,000 to qualify for that benefit. Additionally, there are often annual maintenance fees that can affect your credit score, especially when you’re taking out loans.
“The banks and agents might not always mention these terms, leading to surprises for users later on. Not all credit cards are misleading, but it’s important for users to thoroughly research the details before signing up,” he explained.
CA Shiv Gupta, Finance Manager at Nshama Properties, shared insights noting, “As per my analysis, having multiple credit cards with high credit limits increases your DBR, reducing your chances of getting additional loans. Credit score AECB-Holding multiple cards increases your credit exposure, and high utilization or missed payments can negatively impact your score, making future borrowing expensive.”
He added that there’s a possibility of ‘increased stress’, in the momentum of keeping track of multiple cards, statements, limits, and due dates, which requires significant effort.
“A single oversight can result in late fees and penalties. Failing to pay on time leads to high interest rates and late payment charges and having multiple cards may encourage excessive spending beyond your income limit,” warned Gupta.
However, he feels there are also some benefits, if used properly, which can be, a high overall credit limit, maximizing rewards and cash-back offers, balance transfer facility can be utilized.
“Short-term quick cash can be arranged. Exclusive offers and discounts can be grabbed and one can build a strong credit profile if used properly,” explained Shiv.
Another spokesperson, who didn’t want to reveal their identity, also a CA in Dubai, shared, “Holding multiple credit cards can lead to missed payments, negatively impacting credit scores, while excessive interest rates and hidden charges further compound financial strain. Additionally, the rise of cyber frauds, with cards being used without proper OTP or CVV verification, has become a rampant issue, making users vulnerable to financial losses.”
While some individuals take out several cards to benefit from initial bonus cashback offers, they often cancel them within six months, unaware of the long-term consequences. Experts advise careful consideration before acquiring multiple credit cards, urging users to weigh both the potential rewards and risks.
