Many people will tell you there is no such thing as a free lunch… that's not entirely true for credit card benefits though!
If you play your cards right (excuse the pun!), you can be getting significant value just by putting your day-to-day expenses through them. Credit cards do need to be managed carefully, so make sure you read to the end and take note of the things to watch out for!
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Before we begin, let's talk about the various types of cards that can give you benefits (collectively, they're called reward cards):
- Cashback cards - offering you a % AED back on your spend
- Travel cards - designed for frequent travellers with travel points, lounge access, etc.
- Co-branded cards - issued in conjunction with a given company (e.g. an airline, hotel chain, supermarket, delivery company) giving you a boost for spending with that company
- Balance transfer cards - allowing you to transfer another credit card's balance to it to enjoy 0% interest for some time (usually 3–6 months in the UAE)
The list of options for each of those is lengthy and we'll chip away at them one by one. Today's newsletter will tackle cashback cards to allow you to stretch those UAE winter budgets even further!
Cashback cards - how do they work?
Each credit card offers different cashback percentages on spending in different categories. So you may get 6% on dining, 5% on your school/education fees or 3% on fuel (these are examples only).
At the end of each month, the bank will analyse how much you've spent in each category and calculate the total cashback. That cashback is then either automatically applied to your statement, or you redeem it manually. Alternatively, you may earn points instead, which you can redeem yourself for cash.
Be careful though, banks may have a cap on spending per category and/or a total cashback cap as well. For example, they could pay cashback up to 300 for education (i.e. a category cap) and a maximum cashback per month of 2,000 (i.e. total cashback cap).
Some of the cards will also charge an annual fee (which may be waived in the 1st year) so make sure your cashback outweighs the fee by quite a margin.
So what Cashback Cards would we go for?
| Cashback Card | Benefits | Any catches |
|---|---|---|
| ENBD Duo Credit Card | 5% on utilities, telecoms, fuel, groceries, education and electronics. 0.5% on everything else. | Monthly max cashback 2,000. Abu Dhabi residents only (but non-AD residents have had success recently so worth asking). Annual fee of currently 840 waived in the first year. |
| ADCB 365 Cashback Credit Card | 6% on dining (incl. online orders), 5% on groceries, 3% on utilities, telecoms, fuel and Salik. 1% on everything else. Welcome bonus of 365 if you spend 5,000 within first month. | Monthly max cashback 1,000. To be eligible for cashback you need to spend 5,000 every month. Annual fee of 383.25 applicable from 2nd year onwards. |
| Ajman UltraCash | 5% on 2 of the following 4 categories (you choose): groceries, fuel, online spend and education. 1% on everything else. | Max cashback on fuel (400), online spend (200), groceries (200), education (200). 300 fee for 2nd year onwards unless you spend 12,000 in prior year. |
| SIB Cashback Card | 10% on online and Apple Pay/Samsung Wallet transactions (excluding utilities, telecoms, groceries, education). 1% on everything else. | Monthly total 10% cashback cap at 300. 199 fee for 2nd year onwards unless you spend 10,000 in prior year. |
A quick note on categories. Your spend will be categorised by the card network (e.g. Visa or MasterCard), which assigns categories to the various retailers you shop with. These assignments are not perfect so do check that you are getting the cashback you expect.
For the same reason, you should be mindful of using payment services such as PayPal, as your bank won't "see" the retailer behind it. Those transactions will likely be categorised as "online spend" or similar, even if you actually paid education fees via PayPal.
What to be careful with…
- Annual fees - check them and make sure you get more in benefits than what you pay for the card. Always ask if they can be waived.
- ALWAYS pay off your monthly statement in full - credit card interest is some of the worst interest out there (in the region of 40–50% per annum!)
- Don't fall into debt - for anything you are buying on a credit card you should already have the funds to cover it. That way you only buy what you can afford.
