We tend to see articles regularly telling people to avoid taking out credit cards, and not to use them, but there are benefits to credit cards that should not be overlooked. The trick is to think of your credit card as a tool, so be smart and make it work for you.

How to choose the right card?

The charges on accounts vary and, in this part of the world, most providers have an annual fee. There is however, no uniform charge – and often the higher valued cards or those deemed more desirable, such as gold or platinum, come with a higher fee. It is worth asking yourself whether you need the gold version when the standard ones might do just as well.

Interest rates vary and will make a huge difference to your overall costs if you do not repay in full each month, as accrued interest can build up to significant amounts of money.

When to use it

Credit cards are particularly useful for online purchases, such as for flights or from international websites. There are also times when you have to pay for something expensive such as repairs to a car, but don’t have the cash to hand or need to delay repayment. When traveling, it can be easier, and safer, to use a credit card for many purchases, instead of carrying large amounts of cash.

Don’t forget to repay the monies borrowed as soon as possible to avoid those high interest charges.

What to avoid

The credit cards themselves should be kept safe at all times. When making online purchases you should ensure that the site is secure, so as to avoid details being stolen. If you are in any doubt, double-check before entering any details. [Related: Have you been a victim of online credit card fraud?]

A credit card should never be used as an extension of your current account. Instead, it should be treated as an additional facility that should be repaid each month. If you maintain a high balance and only pay the minimum repayment each month, then the balance will never reduce. Bear in mind that whilst a cash withdrawal facility can be useful in an emergency or whilst travelling overseas, it should not be used for day to day expenses, and often additional charges apply.

Another point to watch is that many companies will charge you simply for using your card overseas. The charges vary, but for payments in another currency you could easily be charged an additional 3% on the transaction. [Compare all UAE credit cards and foreign exchange rates | Compare all Saudi Arabian credit cards and foreign exchange rates]

Additional benefits

If a problem arises with a purchase, the credit card company can often assist. They can speak with a retailer, offer purchase protection or extended warranties on items bought with the card, as well as providing a worldwide helpline. Check to see what your card provider offers by way of consumer protection. [Related: How your credit card protects your purchasesWhat is Credit Shield?]

Many cards offer additional benefits such as points for airline loyalty schemes, access to airport lounges, discounts at particular stores or even invitations to events for valued customers.  Others offer free rounds of golf, hotels, cinema tickets or roadside assistance. [Related: Don’t ignore the little extras that come with your card | Cashback or rewards?]

The additional benefits vary and can be attractive, but don’t let them sway you into taking out a card you don’t need and running up an expensive debt. If you use a card smartly, it can be a way of managing money and receiving benefits. [Related: 4 mistakes you can make on a credit card]

Keren Bobker is an Independent Financial Adviser at Holborn Assets and writes at financialuae.me