Smart Money Moves for a Financially Healthy 2020

Planning to set your financial goals right at the beginning of the year is a great way to start in 2020.

Review your financial position, check where your money goes, review your debt, cut down on extra expenses and plan efficiently. This will help you stay on savings course and prevents you from getting into any money hurdles.

Here are a few ways to help you do that:

1: Revisit your mortgage loans.

Home loans are one of the biggest financial responsibilities that require regular revisits. Look for better options to save your money or get other benefits when there is a change in your financial situations, bank’s loan terms or interest rates.

Check if refinancing can help you save money. Compare your loan interest rates with the current rates because even half of a percentage point drop will give you substantial savings.

Lower interest rates help in reducing your mortgage term because here you can raise your monthly payments and prepare to clear the loan early. For example, paying off the loan in 10 years instead of 20 years offers great savings incentive to the homebuyer.

2.  Get a personal loan

A personal loan is a viable money-saving solution in many situations when you borrow it for the right reasons. With personal loans, you can settle higher interest loans, create a good credit score, pay off credit cards or consolidate debts with more manageable fixed EMIs.

For instance, when you want to consolidate debts on your different credit cards, taking a personal loan can help pay off all the charges in one monthly payment. You benefit from lower loan interest rate compared to the annual percentage rates (APRs) on your credit cards.

However, before taking a loan, calculate your repayment capacity using an online app, select repayment tenure that is within your reach and carefully review all the fine print.

3.  Select the right credit card

A properly selected card can help you make savings on purchases, but the choice of the card should be based on your use and habits.

For instance, a frequent traveler will make savings when his card offers discounts and rewards on air tickets, hotels or lounge access.

The choice of the card also depends on whether you carry a balance each month or pay off dues before time. When you take forward a balance on credit, select a card that has a low annual percentage rate (APR).

Knowing your credit scores always helps you to apply for a card that is more likely to get approved. Lastly, compare the annual savings you make on the card against the card’s annual fee to see if it is right for you.

4. Find a balance transfer scheme

A balance transfer can help you make substantial money savings. Transferring high-interest debt from credit cards or loan to a card with a lower interest rate gives saving on interest and helps in clearing off the debt faster.

However, check if any balance transfer fee is levied to carry the balance to your new card. Another critical factor is the new card APR rate; check the introductory APR offer and price after the promotional period ends.

Always evaluate the terms carefully and put a debt repayment plan in place. Remember your debt doesn’t disappear when you do a balance transfer, but effective planning can help make good money savings.

5. Work out your monthly budget

Make a note of your cash flows to curb all unnecessary spending. Different apps come as a handy tool to do all the calculations for you.

Feed-in your monthly income and your expenses and the app will give you a clear picture of how to plan yourself well.

These tools help you consolidate all your bills, track the spending pattern and get an alert message when the due date of any statement is nearby to avoid late fees. Money management is a vital step to rein spending and get finances under control.

6. Review your subscriptions

If you are a Netflix and Amazon Prime addict, ask yourself if you need all these subscriptions and if you have the time to watch them?

Most people pay more on subscribing too many services but hardly use that entertainment and reading channels they have.

It’s the time to evaluate the spare time you have at hand to use these services and the cost you are spending monthly on subscribing to these. This helps you track the service you can do without and make money savings.

Besides entertainment, your current telephone and mobile plan also needs to be reviewed. Check your bills to study your usage patterns. If you are not using the full service, try considering another package. And if you are paying extra after the service amount, see if you can sign up to a new scheme that serves best to your needs.

 

1 Simple Way to Relax in Luxury and Style Before You Board Your Next Flight

UAE airports are always buzzing with traffic. The very make of the country’s population mix drives travel and in many cases frequent travel. So, let it be travel to home country, leisure tours or even business travel, there is a significant amount of travel residents undertake.

Gone are the days where one must wait near the crowded gates with limited access to essentials such as internet access or even a seat. Lounges are a boon to travelers, a place where they can relax with their families and have a nice meal or even work without any hassles.

Access to most of these lounges is free through business class tickets or memberships. Having said that there are options available for folks who travel in lesser space as well. After spending hours on saving money on the best possible rates for your flights and bookings, it does not really make sense to spend the saves on lounge. But wait! What if it is free? All the luxury and bliss at no cost.

Most of us carry credit cards and these cards in UAE offer airport lounge access free of cost. This is seen as a favourite and useful feature which gives absolute value to customers. It does not matter which airline one flies or even which class, the free lounge access feature is available on most of the credit cards.

This article elaborates on the Airport lounge feature and the different bands and respective benefits UAE credit cards offer.

What exactly do I get free with my credit card when it comes to Airport lounge access?

Free Access to Airport Lounge

Depending on the specific credit type that one may have, free access can be availed at Airport lounges. Airport lounge offers complimentary snacks, drinks, wi-fi and glossy magazines along with a peaceful place to relax before you board.

 Supplementary Card holders

If your family has supplementary cards, they can also avail the facility free of cost. It is important to note that not all card types allow supplementary cards holders. Do refer to the table below to identify which card allows supplementary card holders

 Guests

In addition to supplementary card holders, some of the credit cards allow guests accompanying primary card holders as well.

Number of visits

Some of these card types have a limitation on number of visits in a calendar year, post which the bank will apply a charge in case of any usage.

It is always wise to find out which airport lounge allows free access to the credit card you hold prior to your trip. This can save a lot of unnecessary walking within the terminals and most importantly disappointment at the lounge check in counters which sometimes can have a lengthy wait line.

 

Note: While the above is a standard offering from the associations (Visa and Mastercard), some banks might have customized the lounge offer on their respective cards. Hence it is advisable to refer to their product features section for more details click here.

 

Takeaway

Travel can be more enjoyable if planned well. While complimentary Airport lounge access offered by a credit card is a no-brainer one must be aware of all the other travel related benefits credit card offers. After all, why would one say no to a free feature which could be worth thousands of dirhams otherwise.

As a personal finance aggregator Soulwallet has analysed various credit card features and rated them based on an apple to apple comparison. Let it be Golf, Airport Transfers, Valet or even Cinema offers, one can easily refer to the ratings. For more details visit us on www.soulwallet.com.

Leave your worry behind and enjoy every bit of your travel. Bon voyage!

 

Good Credit Score Means Good Financial Health – Understanding How Credit Score Works can Help You Save Thousands of Dirhams

Credit reports and scores are essential to financial health of any economy. Its primary use is to help financial institutions use the information provided in the report to assess the credit standing of an individual prior to issuing individuals any credit products (credit cards, personal loans and so on).

Al Etihad Credit Bureau is the entity which provides credit reports to consumers and financial institutions in the UAE.

As an individual it is beneficial to have a good credit score as this will not only ensure that your chances of getting a credit card or loan (personal loan, auto loan, home loan) etc. are increased but, almost more importantly can help you save money as banks frequently give better terms (lower interest rates, higher loan amounts etc.) to individuals with better credit scores.

In this article we will help you better understand credit reports.

Components of a Credit Report

Financial Liabilities – Financial institutions are required to provide details of credit facilities such as credit cards, personal loans, mortgage loans etc., to the UAE Credit Bureau. Details such as assigned credit limits, utilized limits on credit cards, payments made, delayed payments, returned/bounced checks, loan amounts issued, outstanding balances, age of the loan/credit card, active status, police case history and so on are some of the key data points shared. In addition, the below details are also shared with the credit bureau:

Employment Details: Employer Name, Income, Date of Employment are a few details pertaining to employment

Addresses: Residence address, emirate, contact details including mobile numbers and email ids.

Personal Identification – Emirates Id number, Passport Number, Date of Birth etc.,

The Al Etihad Credit Bureau (AECB) manages the process of collating the information received from all financial institutions (as well as some other non-financial entities such as telecom and utilities providers) and summarizing this at an individual customer level.

These details are structured in a systematic and easily readable format which the financial institutions can access in assessing the credit worthiness of potential customers.

What is a credit score and why is it important?

Credit score is a three- digit number which is assigned by the credit bureau based on various variables such as number of loans, repayments, delayed payments, credit utilization and so on. Credit scores range from 300 to 900, higher the better from a financial health perspective.

The credit score is an indicator of a customer’s financial profile and it is important to note that quite a few banks have moved to offer credit score-based features (interest rate, loan amounts etc.) to their customers. This means you will get more beneficial terms the higher your credit score .

So, what is the mantra to maintain a healthy credit score?

Below are some simple disciplined practices one needs to follow:

  • Do not hold too many credit cards. Find out the best credit cards for “You” and stick with it. Close the ones which are not suitable for you or you carry but don’t use too often. Use Soulwallet’s “Best Fit Credit Cards Tool” to find out how good your credit card isyou’re your individual spend patterns and other requirements.
  • Ensure payments are made on time. And whenever possible, in full. This is the most important aspect and has a significant weightage in one’s score. Missing payments is a huge no-no and will definitely adversely impact your credit score. Remember the golden rule – “only borrow what you can afford to repay”!
  • Avoid going over the credit limiton your credit card.
  • Try and stay below 40% of your credit utilization. If you have a credit limit of AED 10,000 and your current credit card balance outstanding is AED 4,000, your utilization rate is 40%. The lower the better.
  • Keep copies of your bank clearance letters for records, there are possibilities that one might have to provide them to have the details amended (if they still show up on the credit report).

Please note – credit scores are not carved in stone, it is a dynamic and ever-changing variable, updated periodically when inputs are received from banks and financial institutions.

Credit scores take a significant time and effort to improve and, in this case, we would clearly recommend that prevention is better than cure.

How and where can I get my credit report?

For individuals the best recommended option is to download the AECB (Al Etihad credit bureau) app on the mobile phone via Google play or the IOS App store and download the report or score. Note, the charges are much lower to download the report online rather than by visiting an AECB branch. Click here  to find more details.

Takeaway

Soulwallet strongly recommends you to compare products through a neutral and unbiased comparison site before you make a financial decision which can be as simple as signing up for a credit card in UAE.

Most UAE residents at some point or the other will need to explore options to avail credit facilities from a financial institution. The reasons could be as simple as managing to pay an annual school fee or to cover an unexpected medical expense. Having a good credit score can not only make the process of getting a loan much simpler but can also potentially help one save thousands of dirhams (a simple example is the money saved through a lower interest rate offered on your personal loan in UAE based on a good credit score).

possible reasons why your credit card application has been rejected

Top 3 possible reasons why your credit card application has been rejected

 

Credit cards are popular and convenient payment tools. It is a well-known fact that banks offer several attractive features on their best credit cards such as Cinema offers, Airport lounge access, Valet service, Golf offers and many more.

Banks are constantly looking to acquire customers who have a good track record of payments and credit history. In a country like UAE,  where in 80% of the bankable population is made up of expats, it is important that banks do their due diligence prior to approving any credit facility such as credit cards or personal loans. 

Banks have different under writing policies which decides the fate of one’s application? Now, Let me try and simplify the top three reasons why credit card applications get rejected. 

1. Income Criteria Not Met

This is generally the first eligibility criteria that is checked. It is important to note that UAE’s central bank circular 28/2010 “Regulations for Classification of Loans and their Provisions” dictates that banks must ensure that personal loans must be given to people who earn a minimum of AED 60,000 annual income. Note, credit cards in UAE are considered as a form of personal loans and hence this applies to both credit cards and personal loans.

While the interpretation of this regulation might differ bank to bank from an implementation perspective, this criterion ensures that banks do not lend to those who earn less than AED 5000 per month considering living expenses, affordability etc.,

Over the last couple of years, banks have built a system to verify income information from each other in an automated way. This is done by reading Salary credits from your bank statements through a central system. This has relaxed banks policies on documentation requirement in the recent years. 

So, in short it is important to know that one must be earning a minimum income of AED 5000 per month to avail a credit cards or personal loans in UAE

Banks also offer cards for customers based on their income . For e.g., a Prime Infinite Credit Card from Dubai Islamic Bank is offered to a customer who has a minimum income of AED 50,000 per month.

2. Weak or Poor Credit History 

In UAE, Al Etihad Credit Bureau receives financial information from all providers and provides credit reports to residents and financial institutions. The report contains records of an individual’s liabilities such as credit cards, loans etc., Banks evaluate the credit report for repayment history prior to approving applications.  It is imperative that one maintains a clean credit history in order to avail any loan/credit card facility in UAE. Level of debt, payment history, credit history age has an impact on your credit score.

Below needs to be taken care to ensure a clean history.

  • Always pay dues on time.
  • On cards better to pay the entire outstanding. If not, minimum due to be met. Note, full payments may result in a higher credit score.
  • Avoid going over limit on your cards.
  • It may take more than 5 years for a credit record to be cleared hence utmost care to be taken to ensure all the above points.
  • One can avail their credit report online from AECB for a fee. Visit the Al Etihad Credit Bureau (AECB) for more information. 

3.Debt Burden Exceeded 

In UAE, banks have been regulated to ensure that financial liabilities of an individual do not exceed 50% of the monthly income. While Banks follow different processes to ascertain debt burden the general logic is explained below for simple understanding

Monthly Income: AED 10,000

Monthly financial payments (Credit card minimum dues, Loan EMIs): AED3000

Debt burden:30%

Ensure all unused credit cards are closed. Receive and maintain closure or clearance certificates from respective banks for documentation purposes. Consolidate debt as a loan so that the instalment is affordable and within the debt burden. Stay financially fit!

Takeaway

While the above 3 are the top reasons for rejections. There are 90% chances one can get their card or loan approved if the above 3 conditions are met.  Roughly 10% of applications stay rejected for reasons such as verifications and other policies.

Picking the perfect credit cards in UAE for your specific needs should always be based on how you plan to spend and what your current lifestyle is like. Traditionally one signs up for a card based on sales pitch by a bank’s sales executive.  Take advantage of Soulwallet’s credit card comparison platform to make sure you make an informed decision. 

 

How to get the best dining deals out of cashback credit cards?

The more you spend, the more you save! Unbelievable yet holds true and here is how you do that if you are smart enough. Enter Cashback.

Cashback is an offering from Credit Card companies that rewards you instantly for making purchases.

How does it work?

Cashback credit cards benefit the user by paying a percentage of the purchase you make. Not just purchases, using them in your favorite hotels, restaurants or any other experience centers in UAE can also save you some dirhams. So, the next time, you are swiping your card in a restaurant or purchasing the latest mobile phone, look out for the exciting cashback offers and maximize it.

Lookout before you Swipe!

Though it is exciting and absolutely fantastic to get some hard earned money back do note a few pointers that needs a closer look before you swipe.

Like any credit card, these credit cards are entitled with pre-determined limits which many people fail to notice. It is for the simple fact that these are in fine print and easy to ignore or miss out.

If you are a frequent visitor to restaurants, here are some credit cards that offer the best dining deals which could save you from spending more.

Citi Cashback Card:

With a minimum salary of AED 8000, you can avail this card which can provide a lot of cashback benefits while dining at your favorite restaurants. You can enjoy up to 20% discount at over 400+ dining outlets in the UAE. The redemption is automatic as well. No calls, no emails!

Dunia Finance Platinum Credit Card:

The minimum salary requirement is the same as that of the Citi Cashback Card. But Dunia finance offers free Zomato Gold Annual Membership when you opt for this credit card. It also offers hundreds of Buy 1 Get 1 (BOGO) offers from MasterCard throughout the Middle East and Africa.

Najm One Cashback Card:

This cash back credit card from Majid Al Futtaim Finance offers a lot of discounts on dining and entertainment. With this card, you can avail up to 30% discount at selected restaurants. They also make payments easy by providing card-less solutions i.e., Samsung pay.

CBD Visa Infinity Card:

The Commercial Bank of Dubai offers great deals on dining with this visa card. It has great dining privileges which include Dragon Pass, the World’s 1st all-in-one Digital Airport platform which lets people enjoy food at restaurants within the Airport. In addition to this, dining discounts in Premium Hotels in UAE can also be availed with this card.

Standard Chartered Platinum Credit Card:

The Platinum credit card from Standard Chartered lets people enjoy a wide variety of offers that includes offers up to 50% in popular cafes and restaurants. To be even more specific, it offers a Buy 1 Get 1 offer (BOGO) at all outlets of Costa Coffee.