Financial experts in the UAE have warned that paying only the minimum monthly amount on a credit card can significantly increase the cost of repaying the debt. A Dh10,000 balance could take nearly nine years to clear, with total payments exceeding Dh22,000.

Ambareen Musa, Revolut’s regional chief executive for the Gulf Cooperation Council countries, said more than Dh12,250 would be spent on interest in such a scenario.

How does a Dh10,000 debt lead to Dh22,000 in repayments?

According to Musa’s calculation, if a credit card charges 3 per cent interest per month and the cardholder pays only 5 per cent of the outstanding balance after interest each month, or a minimum of Dh100, whichever is higher, it would take about eight years and nine months to repay the debt in full.

Assuming no new purchases are made, total payments in this example would reach about Dh22,257, including more than Dh12,257 in interest charges.

This figure represents total payments over the repayment period, not the outstanding balance at any one time. The actual cost will vary depending on the interest rate, the bank’s terms and the repayment method.

Credit card interest rates in the UAE typically range from about 2 to 4 per cent per month, depending on the bank and type of card.

A bank credit limit is not additional income

Musa stressed that a credit card is a form of borrowing and that the credit provided by a bank should not be treated as additional income.

She advised cardholders to set spending limits based on their actual income and, whenever possible, pay their full statement balance by the due date each month.

What are the risks of holding multiple credit cards?

Musa said having several credit cards can make it more difficult to manage spending and keep track of repayment deadlines.

In the UAE, total monthly debt obligations should generally not exceed 50 per cent of income. When assessing loan applications, banks also typically factor in 5 per cent of the combined credit limits on all cards when evaluating repayment capacity, even if the available credit has not been used.

The expert also warned about late-payment penalties, cash withdrawal fees and foreign currency conversion charges. She advised cardholders to review their statements regularly and never share banking details or one-time passwords with others.