10 Credit Card Ownership Benefits: Unleashing the Power of Plastic

Global Finance says the Kingdom of Saudi Arabia is the world’s 27th wealthiest country, with a per-capita gross domestic product adjusted for purchasing power parity (GDP-PPP) of $55,368.

This is hardly surprising. The Organization of the Petroleum Exporting Countries (OPEC) reports Saudi Arabia has 267,192 million barrels of proven crude oil reserves and 8,507 billion cubic meters of proven natural gas reserves (circa 2021). Saudi Arabia is rich, no doubt about it.

What comes as a surprise is the country’s low credit card penetration rate. There may be fewer people to apply for a credit card in Saudi Arabia, or Saudis may simply prefer cash payments over digital. Whatever the case, Statista estimates the 2023 credit card penetration rate to be 22.27%. That’s just a little over one in five, a far cry from the credit card penetration rate of other rich countries, say, the United Kingdom.

The United Kingdom ranks lower than Saudi Arabia on the Global Finance magazine’s list of the world’s wealthiest countries. However, 68% of U.K. adults have a credit card. Additionally, nearly one in two of this 68% owns more than one credit card.

Things are looking up for Saudi Arabia, however. The Mastercard New Payments Index 2022 says there’s digital payment momentum in the country, with 30% indicating they used less cash and 89% reporting they used at least one emerging payment method. The younger generations of Saudis are driving this push for innovative digital and cashless payment methods. Another key driver is the pandemic, which accelerated the growth of online shopping and, thus, the need for digital payments.

Credit cards offer a great many advantages. If you are a Saudi debating whether or not to apply for a credit card, read on. The following are the benefits of owning and using a credit card.

1. Convenience and Flexibility

With a credit card, you can make purchases online. It opens up a whole world of shopping opportunities, as you can buy anything from anywhere as long as the online store you want to shop on ships to your country and accepts credit card payments.

Credit cards also let you shop at physical retail stores without the need to carry large amounts of cash. This is not only convenient; it also reduces the risk of theft or loss. Credit cards are widely accepted worldwide, making them the perfect companion for international travel.

2. Financial Management and Budgeting

Credit cards are helpful as a financial management tool. Every purchase and payment you make using your credit card leaves a record or a digital “paper trail,” which you can follow to track and monitor your expenses.

Credit card issuers often offer companion mobile apps that let credit card users readily monitor their credit card purchase and payment history. You can plug this information into a financial management program (or use the app’s native financial management function, if it has one) to get an insight into your spending patterns. This can help you plan how to cut your costs and improve your financial health.

3. Reward Programs and Cashback

Credit card companies offer attractive reward programs for their clients. Their incentives can come in the form of points, miles, or cashback. These are a great way of earning extra value from your daily spending.

Think about it. If you pay with cash, you pay and get nothing in return except whatever you purchased. With a credit card that offers a 2.25% cashback, you get part of your money back. The cashback is stored in your card account, and you can then use your accumulated cashback rewards to offset your credit card bill.

Some credit card issuers also offer sign-up bonuses, allowing you to earn rewards from the moment you use your card. Sometimes, reaching a particular spending threshold unlocks special discounts and incentives.

4. Building Credit History

A credit card can be an excellent tool for establishing and maintaining a good credit history. Your credit card spending will give you a spending record that financial institutions can access and use as evidence of your creditworthiness. As long as you make timely credit card payments, you can demonstrate your ability to manage your credit and significantly improve your credit score.

Why do you need to establish a credit history? You’ll need it to take out a loan to buy a house, a vehicle, or start a business. A strong credit history can help you get loan approval and secure better terms and lower interest rates.

5. Interest-Free Periods

Many credit cards offer interest-free periods, typically 30 to 50 days. Thus, if you pay your balances in full by the due date each month, you won’t incur any interest charges on your purchases.

A credit card with this feature will let you optimize your cash flow and take advantage of the convenience and flexibility of a credit card without incurring additional costs.

6. Emergency Funding

A credit card can give you access to emergency funds in case of unforeseen expenses or financial emergencies. This can be especially helpful when you must cover unexpected medical costs, car repairs, home repairs, etc. A credit card can provide peace of mind, knowing you have a backup plan in emergencies.

7. Enhanced Security

Credit cards offer increased security compared to cash transactions. With advanced fraud detection systems and encryption technologies, credit card companies can quickly identify and prevent unauthorized transactions.

Credit card companies also typically do not hold users liable for fraudulent charges, and this ensures your money is protected. If you see a fraudulent entry on your credit card statement, report it so the credit card company can investigate and, if the transaction is proven fraudulent, reverse the corresponding charge. This is not the norm for debit cards.

8. Installment Plans and Special Offers

Credit cards also allow users to purchase items on an interest-free installment basis. This 0% installment feature is handy when buying big-ticket items. Since you can spread out the cost of a purchase across three, six, or twelve months at no extra cost, you can manage your finances more effectively.

Additionally, credit card companies often partner with various retailers and service providers to offer exclusive discounts and promotions for their cardholders. By taking advantage of these special offers, you can save money on many products and services, such as theme park tickets, restaurants, concerts, electronics, and more.

9. Payment Protection and Insurance

Some credit cards in Saudi Arabia come with payment protection insurance, which covers your minimum monthly payments in case of unemployment, disability, or other qualifying events. This added layer of protection can provide peace of mind during difficult times and help you maintain a good credit history.

Additionally, many credit cards offer various forms of insurance, such as travel insurance, purchase protection, and extended warranty coverage. For instance, if you charge the cost of your airplane ticket to your credit card, you can get automatic travel insurance coverage. This may provide cash benefits for accidents while traveling and reimbursement for costs such as ticket rebooking if your flight is canceled, hotel and meal charges necessitated by long flight delays, and the purchase of necessities (e.g., cost of buying new clothes, luggage, and toiletries) if your baggage gets lost or misplaced.

10. Global Acceptance and Travel Benefits

Credit cards are accepted worldwide, making them an essential and universal tool for international travel. Using a credit card lets you avoid the hassle and fees associated with currency exchange and enjoy a seamless payment experience abroad.

Moreover, credit cards may also come with travel-related perks, such as complimentary airport lounge access and discounts on airfare, hotel bookings, and car rentals. These benefits will not only enhance your travel experience but also save you a significant amount of money on your trips.

Apply for a Credit Card

Credit cards provide cashless convenience, allow you to track your spending, protect you from unauthorized charges, provide an emergency funding backup plan, enable you to manage your cash flow better, and offer numerous incentives, perks, and advantages. If you don’t have a credit card, consider applying for one or continue to miss out on a more rewarding, cashless lifestyle.