Credit cards: boon or bane?

Published June 26th, 2011 - 01:36 GMT
Saudis who use credit cards abroad are slammed by inflated bills when they come back home, as banks add unexpected fees to their purchases
Saudis who use credit cards abroad are slammed by inflated bills when they come back home, as banks add unexpected fees to their purchases

Al-Madinah daily interviewed a number of vacationers to get their views on the usefulness of credit cards. “When I planned to spend my vacation in a foreign country last year I wanted to make sure that I did not experience any financial difficulties,” Saudi youth Mustafa Bakri told the newspaper. “So I took out a credit card from my bank that allowed me to withdraw money from any country. However, I realized my folly when I returned home. I owed a lot of money to the bank, much more than what actually I used. I believe the bank added interest and many other fees.”

Bakri added that a good part of his monthly salary was still being allocated to pay off the bill. He said banks always encourage customers to take credit cards.

Ibrahim Al-Hajiri, another youth who went on vacation with a credit card two years ago, said he will never use them again. “It would have been far better if I had saved up some money in advance instead of using a credit card, which can encourage a traveler to spend more than what he can afford. When you have a credit card, you forget that you are using borrowed money,” he said. He said he would be traveling abroad after a few days without a credit card.

“I have saved enough money from my monthly salary for my vacation.” However, travel consultant Khaleel Muhammad said the use of credit cards was becoming increasingly popular among the younger generation. He said most young customers were using credit cards to pay for their tickets and hotel bookings.

“Last month, customers were queuing at travel offices for cheap tickets to their favorite destinations and most of them paid with credit cards,” he said, adding families preferred tourist packages and usually paid with cash. Tariq Zain, branch manager of a local bank, said demand for credit cards increases considerably during the summer as people consider them a good buffer when they go on vacations.

They mostly want something that covers all emergencies during their journeys, he said. Mahdi Saleh, a tourist official, said because of the high cost of traveling to European countries and security problems in many Middle Eastern countries, Saudis are looking at other holiday destinations.

“Most youths now want to spend their vacation in Indonesia or Malaysia. Before the recent hikes in prices, young Saudi travelers opted for France because it was cheap. But now the situation has changed and the demand is for Asian destinations, which are cheaper.” He added that most families preferred to spend their vacations in Turkey.

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