How Your Dh10,000 Credit Card Debt Could Balloon To Dh22,000 Over 9 Years

(MENAFN- Khaleej Times) The UAE consumers have been warned that credit credit limit is 'not a spending target' because if they pay only the minimum each month, a Dh10,000 card balance could take almost nine years to clear and cost more than Dh22,000.

In an interview with Khaleej Times, Ambareen Musa, CEO of Revolut, warned that more than Dh12,250 of that total would be interest alone.

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She cautioned that a relatively modest balance can become a long-term financial burden and advised consumers to clear their full statement balance each month or, at the very least, pay substantially more than the minimum.

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Revolut CEO based her illustration on a hypothetical monthly interest rate of three per cent. The minimum payment is assumed to be five per cent of the outstanding amount, including interest, or Dh100, whichever is higher. If the cardholder makes no further purchases, it could take about eight years and nine months to clear the debt, with total repayments of about Dh22,257.

In the UAE, credit card interest rates typically range from around two to four per cent per month, depending on the bank and card. That translates to roughly 30 per cent to 45 per cent per year on a simple annualised basis.

Unpaid amounts attract interest, she explained, and if the balance is still not cleared the following month, the cardholder starts paying“interest on interest”.

“Even increasing monthly repayments by a manageable amount can make a significant difference to the overall cost of borrowing,” she said.

According to the UAE Central Bank's Q2 2026 Credit Sentiment Survey, financial institutions adopted a more cautious approach to personal lending, with the overall lending appetite net balance declining to -20.5 percentage point. The reduction in appetite was evident across all lending categories, with car loans recording the largest decrease, followed by credit cards and other housing loans (includes refinancing and renovations). Lending appetite is expected to recover next quarter across all personal loan categories, with the overall net balance projected to increase to +13.3 percentage point, with the strongest improvement anticipated for credit cards and housing loans.

'A credit limit is not a spending target'

Musa said a credit card is a form of borrowing, not an extension of income.“Credit cards can be a useful financial tool when used responsibly,” she said, but problems arise when consumers rely on credit to fund everyday expenses they cannot comfortably afford.

She encouraged residents to set a personal spending limit based on their income, not on the limit the bank has offered. Budgeting, regular transaction reviews and real-time spending notifications can help people stay aware of where their money is going, she added.

A steady income does not automatically translate into good money management, Musa said. Credit cards can create a disconnect between spending and the money actually in a person's bank account.

High limits can tempt consumers to treat available credit as extra disposable income, she said. Small purchases, particularly digital payments, can also accumulate quickly because spending feels almost effortless.

How many cards are too many?

There is no universal number of cards a salaried person should hold, she said, as it depends on individual circumstances, commitments and spending habits. Many UAE residents hold several cards to benefit from cashback, air miles or rewards.

However, every card can affect a person's debt burden ratio (DBR), which measures monthly debt obligations against income. She said the maximum DBR in the UAE is generally 50 per cent, and banks typically factor in five per cent of total card limits when assessing borrowing capacity, even if the cards are unused. For someone earning Dh10,000 a month, total monthly debt commitments should generally not exceed Dh5,000 to qualify for additional borrowing.

Managing several cards can also make it harder to track spending, repayment dates and balances, and can increase exposure to fraud, she said. A common mistake is losing sight of total spending across cards, or using one credit facility to repay another without addressing the underlying spending behaviour.

“Having multiple cards does not necessarily mean greater financial flexibility,” she said.

Hidden fees to watch for

Musa said consumers often underestimate the cost of late-payment charges, cash-advance fees and interest on outstanding balances, which can accumulate quickly even when annual fees are predictable. Many people also overlook foreign exchange fees on overseas spending, which are set out in the terms and conditions and the statement of fees.

She advised paying bills on time, avoiding cash advances where possible, checking fees before international transactions and reviewing monthly statements for unexpected charges. Cardholders should also protect personal financial information and never share one-time passwords or account credentials.

For newcomers to the UAE, a credit card can be a good way to build a credit score, which can later help in securing a mortgage, Musa said. But it should not be treated as an easy loan, and a poor score from misuse can have the opposite effect.

“Being financially responsible is not about avoiding credit cards, but about using them wisely,” she said.

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