UAE credit card warning: Why a Dh10,000 balance becomes Dh22,000

Consumers in the UAE have been warned that a credit card limit should not be treated as a spending target. Paying only the minimum amount due each month can turn a Dh10,000 credit card balance into a long-term financial burden, potentially costing more than Dh22,000 to repay.

Ambareen Musa, CEO of Revolut, explained that more than Dh12,250 of the total repayment could go towards interest alone.

She advised consumers to clear their full credit card statement balance every month or, if that is not possible, pay substantially more than the minimum amount due.

How a Dh10,000 Credit Card Balance Can Grow to Dh22,257

Musa illustrated the impact of minimum payments using a hypothetical monthly interest rate of 3%. The calculation assumes a minimum monthly payment of 5% of the outstanding balance, including interest, or Dh100, whichever is higher.

If a cardholder makes no additional purchases and continues paying only the minimum, it could take approximately eight years and nine months to clear a Dh10,000 balance.

The estimated repayment would total around Dh22,257, including more than Dh12,250 in interest.

The example highlights how small repayments can prolong debt and significantly increase borrowing costs over time.

Credit Card Interest Rates in the UAE

Credit card interest rates in the UAE typically range from around 2% to 4% per month, depending on the bank and card. This translates to approximately 30% to 45% annually on a simple annualised basis.

Musa explained that unpaid balances attract interest, and if the outstanding amount remains unpaid into the following month, cardholders can end up paying interest on accumulated interest.

She added that even a manageable increase in monthly repayments can significantly reduce the overall cost of borrowing.

UAE Banks Adopt a More Cautious Lending Approach

According to the UAE Central Bank's Q2 2026 Credit Sentiment Survey, financial institutions adopted a more cautious approach to personal lending.

The overall net balance for lending appetite declined to -20.5 percentage points, with reductions across all personal lending categories. Car loans recorded the largest decline, followed by credit cards and other housing loans, including refinancing and renovations.

However, the survey projected a recovery in lending appetite in the following quarter, with the overall net balance expected to rise to +13.3 percentage points. Credit cards and housing loans were expected to see the strongest improvement.

Why Your Credit Limit Should Not Determine Your Spending

Musa stressed that a credit card represents borrowed money rather than an extension of a person's income.

Although credit cards can be useful financial tools when managed responsibly, relying on them to cover everyday expenses that a person cannot comfortably afford can lead to financial difficulties.

She recommended that UAE residents:

Set a personal spending limit based on their income and financial commitments.

Review transactions regularly to understand where their money goes.

Enable real-time spending notifications to monitor purchases.

Avoid treating available credit as extra disposable income.

Pay credit card bills on time and avoid carrying balances whenever possible.

Musa also warned that small digital payments can accumulate quickly because cardholders may not immediately feel the impact on their bank balances.

How Many Credit Cards Should You Have?

There is no universal number of credit cards that suits every salaried individual. The right number depends on a person's income, financial commitments and spending habits.

Some UAE residents maintain multiple cards to benefit from cashback, air miles and reward programmes. However, each card can affect their debt burden ratio (DBR), which measures monthly debt obligations against income.

Musa explained that the maximum DBR in the UAE is generally 50%. Banks typically factor in 5% of total credit card limits when assessing borrowing capacity, even when cardholders have not used those limits.

For example, a person earning Dh10,000 per month would generally need to keep total monthly debt commitments within Dh5,000 to meet the DBR threshold for additional borrowing, subject to the bank's assessment and applicable rules.

Holding several cards can also make it harder to track spending, repayment dates and outstanding balances. It may increase exposure to fraud and encourage consumers to use one credit facility to repay another without addressing the underlying spending problem.

Musa noted that having multiple cards does not necessarily provide greater financial flexibility.

Hidden Credit Card Fees UAE Residents Should Watch For

Credit cardholders may underestimate additional charges that increase the cost of borrowing. These can include:

Late-payment fees: Charges for missing the payment deadline.

Cash-advance fees: Costs associated with withdrawing cash using a credit card.

Interest on outstanding balances: Charges that accumulate when cardholders do not clear their dues.

Foreign exchange fees: Additional costs on international purchases, depending on the card's terms.

Annual fees: Charges associated with maintaining certain credit cards.

Musa advised consumers to pay their bills on time, avoid cash advances where possible, check international transaction fees before travelling and review monthly statements for unexpected charges.

She also reminded cardholders to protect their financial information and never share one-time passwords or account credentials.

Can a Credit Card Help Build a Credit Score in the UAE?

For people who have recently moved to the UAE, a credit card can help establish a credit history when used responsibly. A healthy credit record may support future applications for financial products, including mortgages.

However, missed payments, excessive borrowing and poor credit card management can damage a person's credit standing and make future borrowing more difficult.

Musa emphasised that credit cards should not be treated as easy loans. Instead, consumers should use them within their financial means and maintain a consistent repayment routine.

She concluded that financial responsibility is not about avoiding credit cards altogether, but about using them wisely.