The Relationship Between Credit Card Interest Rates and Rewards

While finding the best credit card in the UAE depends on your personal profile and preferences, there is a significant trade-off between credit card rewards, interest rates and annual fees. Some individuals prefer credit cards with no annual fees, while others prefer cards loaded with benefits and special rewards. So how does the cost of a credit card differ depending on the product’s features? According to, as of December 2014, the following average interest rates and annual fees apply to credit cards in the UAE:

Type of Credit Card

Average Annual Interest Rate

Average Annual Fee

All UAE cards


AED 422

With Rewards Program


AED 457

Without Rewards Program


AED 221


If you have a high credit card balance, then your priority should absolutely be to find the best credit card rates. There is a significant difference in the interest rates and annual fees of cards with no rewards program versus those that do come with rewards (i.e. Airmiles, Cashback or Rewards Points). Accumulating Airmiles or Rewards Points makes no sense if you are carrying a large monthly credit card balance. Any savings you make from the rewards program will be offset by higher interest payments and annual fees.

On the other hand, if you are utilizing a relatively low percentage of your credit limit, then a rewards program may be a good option. The majority of credit cards in the UAE come with Airmiles, Cashback or Rewards Points; you can really take advantage of this if you take the time to compare credit card options to find the one that fits your spending habits and needs. Our credit card wizard makes this extremely easy by analyzing over 200 cards based on your preferences and monthly spending.

Here are some other important factors to consider:

Introductory Rates

Credit card offers with 0% or low interest rates for the first few months can be very helpful in some cases. If you are planning to make a big purchase in installments, then you can use credit cards with teaser rates to essentially borrow for free. This can eliminate any dilemma you may have about choosing cards with rewards, annual fees or low interest rates.


It is becoming more difficult to use airline miles since the miles required for upgrades or free tickets keep going up while there are now more restrictions than ever when it comes to using them. For this reason, unless you plan on spending a lot on your credit card and paying it off fully each month, you may want to consider a different type of credit card.


If you know that you will have a hard time controlling your spending, but still need a credit card, then look for one with a lower interest rate and credit limit. On the other hand, if you are very disciplined, then using rewards programs to save money can be a good decision. 

Related articles:

Do Cashback Credit Card Offers in the UAE Pay Off?

The Credit Card Rewards Game in the UAE

Foolish Credit Card Mistakes You Should Avoid