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October 4, 2017 | 16:10 | Dubai
In contrast to assumptions that UAE residents are prone to accruing large amounts of credit card debt, a yallacompare survey has found that the vast majority of UAE residents ensure that they clear their credit card bills at the beginning of each month.
The survey, taken in September 2017, polled over 270 UAE residents on their attitudes towards credit cards. It found that 70% view their credit card bill as a top priority every month. Respondents in this group said that they ensure any outstanding credit card debt is cleared ahead of other bills when they receive their salaries.
The results show a marked improvement in UAE residents’ attitudes towards credit card debt. A 2013 study by yallacompare, then under the brand name compareit4me, found that one in five UAE residents had taken out a loan in order to clear soaring credit card debts. It also found that 42% ambled on with credit card debts by only making the minimum payment each month.
“As we’ve advised our users before, making only the minimum payments on your credit card opens you up to enormous interest-based expenses. Therefore it’s highly encouraging that our most recent survey suggests that UAE residents are reaping the benefits of credit cards while still being responsible with their repayments,” said Jon Richards, CEO of yallacompare.
Indeed, according to yallacompare’s recent survey, fewer than 5% of UAE residents make only the minimum payment on their credit cards every month. The remainder of respondents said that they regularly pay more than the minimum required, but tend to have a little outstanding credit card debt every month.
“With the advent of credit scoring from Al Etihad Credit Bureau, and the uptake of credit checks by local financial institutions, the UAE has become a model country in the region for sensible lending,” said Richards.
“On top of that, consumers have, on the whole, wised up to the benefits of staying on top of debts. Our survey indicated that 78% of UAE residents consider interest rates as a primary factor when selecting a new credit card. This level of financial literacy can only be a good thing for the banking ecosystem as a whole.”
However, UAE consumers still indicated a strong preference for cards that offered them additional benefits such as air miles, cashback and entertainment offers. Almost 27% said that, if they were choosing a card based on benefits, cashback would be the most important feature, while 25% said that lifestyle benefits and discounts was the most important. Air miles was the next most popular feature, with 23% saying that miles-earning potential was most important when selecting a credit card.
UAE residents do indeed take advantage of these benefits. According to the survey, 35% of UAE residents “almost always take advantage of all of the card’s benefits”, while 21% said they’ll certainly use their card’s benefits once or twice a month. Just 6% said that they never take advantage of their credit card’s features.
Either way, UAE banks are clearly on the right track with their products; the survey revealed that 83% of UAE residents would recommend their credit card to a friend or family member. This statistic is a slight improvement on the UAE public’s attitudes towards credit cards earlier in the year, when a survey conducted for the yallacompare Banking Awards H1 2017 revealed that 77% of UAE residents would recommend their primary credit card to others.
Finally, the survey revealed that UAE residents have a tendency to opt for local banks when it comes to their credit cards. Over 57% said that, when choosing a new credit card, they’d prefer it to come from a local bank, rather than an international one.