Benefits of having a Credit Cards

If you are using plastic money responsibly, actually you are much better off paying with a credit card than with a debit card and keeping cash transactions to a minimum. Let’s examine how does it works.

Signup Bonus

Applicants with good credit can get approved for credit cards that offer signup bonuses worth AED 50 to 300 (and sometimes even more).

Rewards and Points

Many card rewards work on a point system where you earn up to 1 or 2 points per dirhams spent. Often companies will offer special three-month promo periods where spending in a certain category, like restaurants or transportation, nets you double or triple the usual amount of points. When you reach a certain point threshold, you can redeem your points for gift cards at some stores, or to buy items.

Your credit card rewards options are almost endless. Get a co-branded card issued by a gas station chain, a hotel chain, a clothing store or even a nonprofit organization like AAA and your rewards may increase even faster.

Cash Back

Use the card and get 1% of your balance refunded regardless of what you bought or where you bought it. Today, this concept has grown and matured: Some cards now offer 2-3% or even as much as 6% back on selected purchases. Some cards, like the Rewards card, offer a higher rate of cash back but you must deposit your cash directly into an investment account.

Frequent Flyers

Every airline has at least one credit card available offering the chance to earn frequent-flyer miles.

Cardholders rack up miles at a rate of one mile per dirhams spent, or sometimes one mile per two dirhams spent. The price of the plane ticket you ultimately end up redeeming your miles for will determine how valuable this credit card reward is, but many frequent flyer cards are made immensely more valuable by their mileage signup bonuses. These are often enough to put you 50-100% of the way toward a free flight within a month or two.

Safety

Paying with a credit card makes it easier to avoid losses from fraud. When your debit card is used by a thief, the money is missing from your account instantly. Legitimate expenses for which you’ve scheduled online payments or mailed checks may bounce, triggering insufficient funds fees and making your creditors unhappy. Even if not your fault, these late or missed payments can also lower your credit score. It can take a while for the fraudulent transactions to be reversed and the money restored to your account while the bank investigates.

By contrast, when your credit card is used fraudulently, you aren’t out any money – you just notify your credit card company of the fraud and don’t pay or the transactions you didn’t make while the credit card company resolves the matter.

Grace Period

When you make a debit card purchase, your money is gone right away.

If you pay from credit card you’ll easily get a 30 days of grace period to pay back and simultaneously you’ll earn bonus points which eventually add meaning to it

Insurance

Most credit cards automatically comes up with consumer protections such as rental car insurance, travel insurance.

Universal Acceptance

Credit cards are accepted almost everywhere, including supermarkets, utility payments, and retail stores.

Certain purchases accepts payment only from credit card like rent a car or stay in a hotel room. Rent a car companies and hotels want customers to pay with credit cards because it makes it easier to charge customers for any damage they cause to a room or a car.

Building Credit

If you are using a credit card responsibly this will help to build credit score as most of the bank will report customer payment activity to the credit bureau.