Business

Top 10 Mistakes People Make With Credit Cards in Saudi Arabia

Profile photo of Aabiya Noman Baqai

Aabiya Noman Baqai

Writer and Editor at Destination Jeddah

We all love the concept of whipping out our flashy credit cards and using them to pay for things.


It doesn’t really feel like you’ve lost much when you can’t see the cash slip from your fingers. But, the power and financial freedom derived from the piece of plastic is short lived and very misunderstood. If used well, they can be a great thing. Remember though, with great power comes great responsibility! So, watch out for the following mistakes that people commonly make when handling their plastic powers.

1. Using credit as cash:

Some people have the habit of using credit to buy all their goods. Cash helps you know how much you’re spending; this is always a good thing. Credit cards are essentially best to reduce the hassle of carrying around huge amounts of physical cash. It’s better to use cash where you can and use credit for larger transactions.

Photo Credit: wiremasters.wordpress.com

Photo Credit: wiremasters.wordpress.com


2. Waiting too long to close the payment:

The longer you wait to close off the balance the more you’ll have to pay. This depends on your issuing bank and what terms the card you carry has. Most cards  charge either interest (global banks) or a fixed fee (Islamic Banks).  These fees accumulate and are often compounded, meaning, the fee is calculated on the new sum owed. Simply put, the more you owe, the more you’re charged .

Photo Credit: blog.credit.com

Photo Credit: blog.credit.com


3. Taking a cash advance:

In case of emergencies, this could be alright especially if the amount owed is quickly paid back before the credit card company or bank charges the interest or commission. You might easily forget to close the payment. Also, just have the habit of taking cash in advance for non emergency cases, making you feel less urgent about closing the balance before the fee.

Photo Credit: blog.clikhome.com

Photo Credit: blog.clikhome.com


4. Closing your account:

Closing the credit account may feel like the right choice when you want to avoid spending but it can actually affect your credit score negatively. It increases the ratio of debt to available credit. The better thing to do is keep it open and but avoid using it on unnecessary purchases.

Photo Credit: engineeryourfinances.com

Photo Credit: engineeryourfinances.com


5. Waiting to report your lost or stolen credit card:

One of the worse things you can do is delay reporting your credit card getting lost or stolen. It needs to be reported ASAP to avoid any major repercussions.

Photo Credit: abcnews.go.com

Photo Credit: abcnews.go.com


6. Not knowing your credit card terms:

When signing up for your credit card, it is severely important to look at the terms and conditions in case you get yourself in a pickle. Is there a fixed payment you need to pay every year just to won the card, regardless of usage? Is the fee charged compounded? What are the terms of late payments? On the other hand, are there any rewards or cash back rewards if you purchase from certain vendors or retailers. It is important to know how to avoid unnecessary charges and also how to maximize the benefits that come along with associating with one credit card company over another.  For example, some credit card companies have discounts in certain hotels. It would be a waste not to know and use this benefit if you could.

Photo Credit: consumerreports.org

Photo Credit: consumerreports.org


7. Getting too many:

Some believe that the more cards you get, the better access to cash one has. This just makes it difficult to track your expenses and your debt, encourages you to spend more, increases your duty to read the terms of each company, and increases the number of places you’re are charged from.

Photo Credit: abcnews.go.com

Photo Credit: abcnews.go.com


8. Ignoring your monthly statement:

This should be crystal clear. But some people avoid looking at their statement because they feel guilty of knowing how much they spent and on what. First, it is imperative that you know how much you owe. Second, human error is always possible (some vendors may charge you twice for the same purchase). Third, your credit card security may have been breached. The statement helps reveal if some purchases which you didn’t make have been charged to you.

Photo Credit: coffeehan.blogspot.com

Photo Credit: coffeehan.blogspot.com


9. Exceeding your credit limit:

Most banks or credit card companies have a policy that increases the fee that you are charged if you exceed the limit that was set for you. Also, your future purchases may be rejected until the balance is closed off, leaving you incapable of using the card for its main purpose (having access to money when cash is unavailable).

Photo Credit: tryhomeequityloan.blogspot.com

Photo Credit: tryhomeequityloan.blogspot.com


10. Buying things you don’t need:

As stated above, credit cards serve the purpose of saving the day in which cash is short. Cards also help you avoid carrying too much money around unsafely. Therefore, use the cards for these intended purposes, large transactions, emergencies, and benefiting from associated rewards.

Photo Credit: justlogbookloan.uk

Photo Credit: justlogbookloan.uk

Be sure to check our article on How Credit Cards in Saudi Arabia work.

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