Credit card spending: Is your plastic really that fantastic?
Interest rates
Do you know how much interest your credit card company charges you? Monthly interest rates on credit cards in the UAE typically range from two per cent to four per cent, translating to annual rates of between 24 per cent and 48 per cent. That's pretty high when you consider the top rate of interest you'd earn on a UAE savings account is about five per cent.
One misconception is when you actually pay interest on your card. In an ideal world, you will pay off your balance in full each month. That way, you avoid paying any interest. But we are not all so financially disciplined.
Sometimes, you can't pay the full amount and instead end up paying half of it or just the minimum balance. That's often when the confusion begins as some people think if they pay the minimum amount due, then they won't be charged interest. Sadly, that's not the case.
Grace periods
A grace period is the time between your statement date and the due date of your payment, which is normally about 21 to 25 days. It does vary among credit card issuers. This grace period applies as long as you pay your full statement balance on time. But if you don't pay the full amount you are charged interest, which is often backdated to the date of the original purchase.
Cash advances
It's hard to think of a scenario where taking a cash advance on your credit card is a good idea. You will be charged interest the second you take the cash as grace periods don't apply to cash advances. Plus, you are usually charged a higher interest rate than for normal spending on the card. On top of that, you will pay a fee for the cash advance. Instead, consider a small personal loan or overdraft with lower rates. However, some banks are improving their offerings for those who really need the cash – Wio bank lets you borrow from your credit limit with Easy Cash, and charges one dirham per day for every Dh1,000 borrowed.
Checking statements
Be honest, how often do you look at your credit card statement in detail? Most people dread it coming and quickly move onto something else. But it could pay to go through it properly. Sometimes, transactions get added by mistake or the card has been used fraudulently. Look at what you paid for and make sure you recognise all the merchants. You can also see any penalties and fees you may have incurred, which should encourage you to manage the card better.
The wrong card
There are hundreds of credit cards out there, all offering different perks. How do you know you are using the right one? Research by comparison site Daleel found that only half of the people they surveyed are confident they have the right credit card for them. A look at Emirates NBD 's website will show you all sorts of card partners including Emirates, Etihad, Dnata, Noon, Lulu, Emaar, Marriott Bonvoy and one called Webshopper. They all offer cashback, air miles or discounts. To choose the right card, you have to match your spending habits with cards that reward those categories. For example, some cards reward certain types of purchases like online shopping, so make sure you only take out this card if you actually do a lot of your shopping online. The same is true for the airlines' cards.
Foreign transaction fees
Some cards may say they are ideal for travel but then charge you 2-3 per cent per transaction abroad. Look for cards that say 'no FX fees' or 'zero per cent foreign transaction fees' if you travel often. But even if they don't charge a fee, you may not always get the best currency conversion rates. When you get the option, always pay in the local currency as the bank will use the more competitive conversion rates used by Visa and Mastercard.
Promotions
We all love a good promotion or discount. For credit cards, it could be 'No Annual Fee'. But this might only be for the first year, and then a huge fee kicks in after 12 months. Zero per cent interest deals are always worth double checking. Are they really not charging any interest? Once the introductory offer ends you may then be charged interest if you don't pay off the full balance.
T&Cs
It would be unrealistic to advise people to read all the literature that comes with a credit card – the small print. But you should get a Key Facts or an 'At a Glance' summary from your bank, while others are turning to videos and other formats to clearly explain the terms and conditions. The more time you can spend reading them, the more informed a decision you can make. For example, while researching this article I browsed a lot of credit cards and landed on the RAKBank World credit card which offers up to 10 per cent on a variety of spending which sounds very generous. But after digging around, I saw that to start earning cashback you need to spend a minimum of Dh10,000 per month on your World Credit Card. That amount might not suit everybody so this is when reading as much of the small print as possible really helps.
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Damage from the port explosion forced the popular Gemmayzeh spot to close down for the first time since Francois Bassil, Mr Charbel's father, opened the restaurant in 1967. When the blast happened, business was slow due to the coronavirus pandemic and Lebanon's economic crisis. Lockdown measures meant the restaurant was open only a few days a week, and would usually serve only a few tables. At the time of the explosion, Mr Charbel had two customers. The blast destroyed everything he and two of his staff were injured, one badly. The restaurant was shut down for four months. In December 2020, it was able to reopen with the help of a community fund-raiser launched by loyal customers. A generous donation of $5,000 by actor Russell Crowe helped Le Chef open its doors again. The Gladiator actor made the pledge in memory of celebrity chef Anthony Bourdain, who featured Le Chef twice on his TV show No Reservations. Mr Bassil said: 'Some people called me and said they wanted to help us rebuild. I didn't know what to say, so I consulted my brother because we're a family business, and he said 'why not, whatever support people offer us, God will give them back twofold'.' 'We're blessed with people's love and support, we thank God for this gift and we thank God that we were able to survive this. 'Our plan was to work and rebuild with the money we make, this is how we have done it over the past decades, through all of Lebanon's crises. But we were open to people helping us and we appreciate it.' Business has since returned to normal but Mr Charbel says there's always a sense of fear in Lebanon of what comes next. 'We're tired, we just want some peace, we want calm, we're tired of all the crises. But regardless, we resist and we live, what else can we do?' He could not say how much the business had lost. Mohamad Al Ayan, owner of a convenience store: Mohamad Al Ayan, 38, who owns a convenience store in Sodeco in east Beirut, spoke of how he struggled to rebuild his damaged shop after the blast. The area is around 3km from the port but still suffered extensive damage. Although it was during the pandemic, he had permission to open until 3pm. 'It was the worst day of my life because we were stuck inside for 15 minutes, we didn't know what was going on. It was dark, there was screaming.' Initially he thought the city's tallest building, Sama Beirut, opposite the shop, had been bombed, such was the extent of the damage to his shop. 'It was like a nightmare,' he added. Mr Al Ayan stayed until midnight to fix his electricity feed and rebuild the front door so no one could break in. He remembers how all of the businesses and buildings in the area were 'broken', their shopfronts destroyed and glass shattered. Much of Al Ayan's inventory was destroyed and an expensive fridge was ripped from its position and flung outside by the blast. He doesn't remember exactly how much the damage cost but it was a lot for a small business. It would be at least two days until he could reopen. 'I paid a lot of money. Many thousands. No one gave me one dollar,' he said. He paid for everything himself and did not have any insurance. No one from the government came to offer support or visit. Some NGOs made inquiries but 'disappeared'. Mr Al Ayan has worked in the area for more than a decade and knows his fellow business owners well. He believed they were all in the same position, forced to fend for themselves. 'Beirut was destroyed. I don't want to remember anything, I don't want to be traumatised again. But everything after August 4 was changed. We are different people. They [the authorities] killed the fear inside us.' 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You're seeing people read, you're seeing people coming to storytelling nights,' he said. Mr Dobson recalled when Aaliya's first opened, 300 people came to storytelling event by a collective called Cliffhangers. 'It was kind of indicative of something more compelling, that there was a yearning for spaces like this in the city and at a specific moment in time,' he said. 'And that became harder to justify after the explosion. Because it almost felt like, what's the point in making micro-improvements when you can see every single one of those improvements disintegrate − both literally and figuratively − in the space of 30 seconds.'
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