The advantages & disadvantages of credit cards

The advantages & disadvantages of credit cards

Posted on March 25, 2018

Before applying for a credit card, it’s best to weigh up the pros and cons of having a credit card before making your application. If used cleverly, a credit card makes it possible to borrow money at no cost, gives you extra protection on your purchases, and you can even earn cashback or enjoy other rewards for spending on your card.

However, if you don’t act with discipline, you could end up paying interest and racking up debts that you may not be able to pay off.

Let’s look at the advantages and disadvantages of having a credit card.

The Advantages


If you need to buy something expensive right now and you don’t have the all the money to pay for it right now then, say hello to your credit card. It is when it is ideal to have one. You can now pay for one in full and then spread the cost over some months by making a sequence of payments to clear the balance.

If it’s a new card, you may get an interest-free period meaning you wouldn’t even have to pay any monthly interest payments. If not, there will be a small interest payments to-be-made each month.

Free borrowing

Any credit card in the UAE lets you spend within your limit and pay back next month at no cost plus some will have a 0% introduction period which effectively means you can enjoy an interest-free loan. Taking advantage of your interest-free period is a great help in managing your cash flow!

Rewards & Cashback

With Mashreq Neo, you can design your own credit card by selecting the rewards that you want to receive from spending on your card. These range from cashback to Salaam Points which can be spent like cash, in addition to 50% off at the Cinema.

Balance Transfers

If you have debt racked up on a credit card at another bank, you can transfer your balance to a Mashreq Neo credit card and enjoy an introductory period of 0% interest.


By paying with your credit card, you get added protection that you don’t get when using a debit card, cash or cheque. You would need to check with each specific Mastercard or Visa card to see what the exact protection is and the amount but it typically covers purchases like flight tickets and would refund you if the airline went bankrupt and you could fly for example.

The Disadvantages

Beware of debt

It’s important to remember that you do have to pay a credit card back so don’t go too far too. If you don’t pay off the full amount each month, then you will pay a small interest fee, and as long as you pay the minimum monthly amount, you won’t incur any penalties.

Selecting the right card

With hundreds of credit cards to choose from in the UAE it can be challenging to make the right decision, especially when your benefits are split across different cards. Mashreq Neo changed all this as you can now create your credit card with the benefits of your choice!

The Mashreq Neo Credit Card

• Pick either Cashback, travel benefits or Salaam Points

• Annual cashback of AED 250

• Zero annual fees

• Discounts and deals on dining and travel

• Complimentary multi-trip travel insurance

Disclaimer: This article has been prepared solely for information purposes. It does not constitute an investment advice, solicitation, offer or personal recommendation by Mashreq, or any of their related parties to buy or sell any securities, product, service or investment or to engage in or refrain from engaging in any transaction, particularly, in any jurisdiction where such an offer or solicitation would be illegal. Neither Mashreq nor any of their related parties warrant the accuracy of the information provided herein and views expressed in this article reflect the personal view which does not take into account of individual clients’ objectives, financial situations or needs. Investors are required to undertake their own assessment and seek appropriate financial, legal, tax and regulatory advice to determine whether such investment is appropriate for them in light of their experience, objectives, financial resources and other relevant circumstances. Neither Mashreq nor any of their related parties accept any liability whatsoever for any direct, indirect, consequential or other loss arising from this article and/or further communication in relation thereto. Mashreq do not accept any obligation to correct or update the information in this article.