Credit cards offer customers the convenience of making purchases which can be paid for at a later date.  Customers are required to pay a pre-agreed profit rate on the remaining balance at the end of every month.

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In order to keep your finances under control, it is important to consider the following when dealing with credit cards:

  • Most credit cards have a fixed annual fee which is dependent on the features and benefits offered.  Ensure you do not keep many cards as you will be required to pay their fee every year. These can also affect your debt-to-burden ratio.

[Related: How does debt-to-burden ratio affect me?]

  • Ensure you do not consume your credit limit as you will be required to clear it by the end of the month.  If there is any remaining balance, you will be required to pay profit on this.
  • Ask your credit card issuer of the billing cycle you are on, and ensure that your clarify what your due date is:
  1. Banks often offer multiple billing cycles (23 days, 28 days etc.), with different credit periods (e.g. 53 days).
  2. Know what cycle you are on to ensure on time payment for avoiding late payment fines and added profit.

[Related: How do credit cards work]

  • It is generally good practice to use your cards only in situations where usage of a debit card is not possible or if it may be considered unsecure
  • Credit cards should ideally be used during travel as customers’ main or current account details are not used for these transactions. Also, since the amounts are cleared at a later date, customers have the convenience of verifying their transactions before paying for them
  • If you have supplementary cards issued for family members, ensure to keep a cap as the credit limit is shared across all cards (e.g. combined credit limit of 1 main and 2 supplementary cards is the same as that of 1 main card). Banks offer the customers to assign a fixed percentage cap towards supplementary cards if the customer wishes for this to be in place.
  • If you have your current account with the issuer of your credit card, you can link these together, to ensure timely payment of part or all of the credit card outstanding balance.
  • If you have a credit card from a different bank, you can set up a standing order for an amount which would cover your monthly usage.  For example, if your credit limit is SAR 10,000 and your expected usage is SAR 7,000 per month, arrange for a Standing order payment a few days before the due date of your credit card.
  • As per credit card regulations, a merchant has up to 45 days to post the amount for a transaction conducted, therefore it is always recommended to confirm that all transactions appear within the next few days of being performed.
  • You should ensure that your credit card is used responsibly and that you are able to keep up with payments on the set due date to avoid negative credit ratings
  • Limit sharing credit card information with others
  • Always ensure you choose a PIN which is secure and not easy to guess: avoid birthdays, anniversaries and sequential codes.
  • Remember to always keep your credit card information secure. Fraudsters may take advantage of any unsecured card and perform malicious transactions under your name.