1. Timely payment maintains your credit rating with the bank and provides you with benefits such as subsidised rates, attractive investment offers, automated credit lines etc.
2. Prevent late payment fees from being levied on overdue amounts and avoid the risk of repossession on secured loans.
3. Always try and keep your credit rating positive, with the bank as well as with the Central Bank and Al Etihad Credit Bureau
4. Avoid defaults on payments to keep a clean record with your bank.

If these benefits have inspired you to better your financial status, and you are wondering how to go about bettering your financial debt, here are a few tips.

1. Build an emergency fund

Financial experts believe that an ‘emergency fund’ can be the first step in avoiding debt. Saving three to six months’ worth of essential expenses can provide a savings cushion in case of unforeseen situations.

2. Stick to a savings routine

First save, then spend. This will help ensure a disciplined savings routine as well as help manage your spending and budgeting better. A routine savings plan is key to building a solid emergency fund as well as keep you away from debt.

3. Choose a spending plan

The best way to avoid overspending is to make a spending plan depending on your earnings. Dividing expenses into needs, wants and short and long-term financial goals can help you keep track of how much you end up spending every month.

4. Only borrow what you need

When you need to borrow any financial product- credit card, car loan, mortgage, student or personal loan- it is advisable to opt for the smallest loan possible. Also, making a fairly decent amount of down payment can reduce your EMIs and help you manage debt better.