Pay Minimum, Regret Later — The Credit Card Debt Trap to Avoid This Holiday Season

School holidays in the UAE are in full swing. Naturally, families are planning getaways, while the shopping lists keep on growing. Add to that the usual weekend outings, daily utilities, OTTs, and online spends, and our expenses quietly rise!

For many of us, the easiest way to manage such spends is a credit card. After all, you can keep spending like you do and earn cashback, rewards, airport lounge access, and much more. However, there’s a very fine line between cards’ convenience and debt that you cannot repay.

If you’re paying only the minimum amount due each month, the impact of your holiday spending can stay long after the break is over. As interest charges pile up, your seasonal spends can quickly snowball into heavy, long-term debt.

Why Do We Get Stuck in Credit Card Traps?

We don’t think of credit cards as “real money” while spending, as no cash technically goes out of our pockets or accounts. If the bill is a few weeks away, all spends automatically feel manageable.

The challenge kicks in when the statement comes. But even then, whether due to ignorance, lack of funds, or simply kicking bills down the road, many pay only the minimum amount due. When you do that, though, the amount doesn’t stay like that. It attracts interest at rates that are much higher than those for usual car, home, or personal loans. Thus, your debt grows very fast and becomes more difficult to clear each month.

This scenario is quite easily possible in the UAE, where you can always find lifestyle, dining, and entertainment deals within reach. Before you know it, these new expenses + minimum due payments can become too big to handle.

So How to Take Control?

The solution is quite easy. 

• Pay the statement balance in full.

When you do this, you eliminate interest entirely. This also ensures that your card-related rewards actually work in your favour.

• Use your credit card like a debit card — instant payment from your account! 

Of course, technically the two cards are very different. But the idea here is to treat every swipe as if money is leaving your account immediately, not weeks later. For instance, if you spend AED 200 on a dinner, transfer AED 200 to your credit card on the same day.

• Clear more than the minimum amount.

While it’s always a good idea to pay the full amount, even if you’re not able to, try to clear just more than the minimum amount. This can save you a good deal on interest over time and make repayments much easier.

• Be real honest with your spends and cards.

If you try your best to pay the amount in full but still carry a balance regularly, it could be that you’re using your card beyond your income. Check whether your spends and card limits are in line with your salary. Cut down on unnecessary expenses so that your credit card debt doesn’t keep ballooning.

At the end of the day, credit cards aren’t the problem. Used wisely, they can simplify your transactions and bring a world of rewards. However, since unmanaged debt can build and stick quite fast, just make sure to manage your card wisely this holiday season!