Credit cards have undoubtedly updated the payment side of today’s world. Aside from superior security, you also gain the dependability of fraud prevention measures, as well as other benefits for using a credit card for daily payments. These cards can be used to pay for a variety of purchases, including shopping and reserving hotels and flights. However, when it comes to buying a car insurance premium with a credit card, many people are apprehensive and puzzled about if it is even possible.
Besides strengthening the payment infrastructure with numerous features for security and reliability, credit cards also make shopping fascinating with their range of benefits like loyalty rewards, cashback, and numerous shopping offers from time to time. Similarly, you can enjoy various benefits of paying your car insurance premium through your credit card.
Here are a few reasons to choose a credit card for car insurance premium payments:
Most insurance companies in the UAE allow car insurance premiums payment through various modes. At the time of payment, you will be required to select the payment method at your convenience. Some common ways of premium payments are as follows.
However, one should note whether are paying an additional fee for the transaction before making a payment through their credit card. Several insurance companies in the UAE levy a fee on your monthly payments through a card. In some cases, the fee is waived if you use your credit card for making annual premium payments.
In addition, paying your car insurance annual premium through a credit card can also offer your numerous rebates and offers. Hence, a credit card can be a smarter choice when paying your car insurance premium in full. However, the conditions associated with them must be analyzed first before proceeding with the purchase.
While a credit card gives you convenience in paying your car insurance premium, it is crucial to pay your credit card monthly bills in order to avoid any interest charges. Credit card interest rates are the highest among all types of loans, ranging anywhere between 25% to 40% APR.
Consequently, using your credit card for car insurance payments is viable only if you are able to repay your car bills conveniently every month. In case you fail to pay the bills before the due date, you may get into massive debt. Thus, it is always advisable to use your credit card for car insurance payments only if you can manage your debts and credit card bills efficiently.
Despite several advantages, there are certain downsides to paying your car insurance premiums through credit cards. The following are the possible disadvantages you may face during premium payments.
While it is obvious that you can pay a car insurance premium up to your credit limit, it is not a wise choice to max out on your credit utilisation as it impacts your credit score. Several insurers go through your credit history and score to understand your financial management while offering you insurance.
As a general rule, you can try to ensure that you don’t exceed 30% of your total credit limit when paying your car insurance premiums through a credit card. Increasing your credit utilisation ratio may also increase your car insurance premiums.
