Terrible Credit Card Mistakes First-time Users Easily Make

Credit cards allow users to pay for items or services in lieu of cash. However, a person should be responsible enough to understand that the card must not be considered free cash.

That is why, for some people,  without proper guidance, it is easy to end up in serious debt within a short span of time.

Here are six of the most common mistakes first-time credit card owners make when using their cards and what can be done to avoid them.

1.Believing credit isn’t important

In the real world, having good credit is vital. Credit scores allow an individual to apply for mortgages and save up on car insurance premiums.

Without excellent credit scores, you won’t have access to lower interest rates or premium credit card rewards. Even potential employers and the landlord of your future apartment might check up on your credit score to see your ability to pay your debts.

By managing your credit responsibly, future credit card and loan applications are approved more easily and you can gain access to better offers. You can also use your good standing to negotiate better interest rates on loans. Even credit cards with a limit of $5000 can help build your credit score.

So apply for a credit card early, but make sure to use it wisely.

2.Spending too much

Credit cards offer users the opportunity to buy or pay for products or services that may currently be out of financial reach. However, if you’re not aware of where your money goes and how much you spend on a monthly basis, you could quickly max out your cards and end up in crippling debt.

Live below your means. This is true regardless of whether you are still currently relying on your parents for financial support or working multiple jobs.

Create a budget to get an idea of your financial state. Make a list of your sources of income and your monthly expenses. There are apps that can make recording this information easier, although simple spreadsheets can work just as well.

Write a goal to motivate yourself to save, then create a financial plan for achieving your objective. It could be as simple as skipping Starbucks for a year or avoiding mall sales.

3.Paying only the minimum amount

If you have any outstanding payments on your credit card, do your best to pay these off as quickly as possible. Compound interest can easily bloat your small debt if you are not careful.

Say, you paid AED5,000 for a used car and paid for the purchase using your credit card. With an annual interest rate of 15 percent making the minimum payment AED150, it will take 173 months or more than 14 years to pay it off. At the end of this period, you would have paid over AED8,300 on interest rates alone.

That is more than your original debt if you think about it, so make an effort to eliminate your credit card debt as quickly as you can.

4.Missing payments

Not paying on time can be devastating to your credit score. It stays on your record for at least five years.

As much as possible, avoid buying anything that you cannot afford to pay in cash. By doing so, you avoid going over your budget and getting into credit card debt.

Find a way to make paying off your credit card debt automatic if you are the type who forgets. Perhaps you can open a bank account that automatically debits a certain amount to pay off your debt. This way, you won’t have to worry about forgetting your payments.

6.Lending your credit card

For some, having a credit card gives the holder a license to spend to its limits. You may be responsible with using your credit card, but you can’t say the same thing about your friend, girlfriend, boyfriend or significant other.

Treat your credit card as you would your bank account PIN: always keep it secured to yourself. Never let anybody else use it to avoid souring your relationship and ending up in bad debt.

Remember these common errors so you can avoid getting into trouble with your credit card company.

Credit cards need not be just fair weather friends!

Credit cards need not be just fair weather friends!

As we are in the thick of the COVID-19 pandemic, all of us in the UAE are taking a close look at our personal finances. Money can be tight—especially if we or a family member lost a job. These are uncertain times, and because of this, it can be helpful to think of ways to ease some of the financial pressures that we are experiencing.

One way to do this is through strategically using credit cards in UAE. The operative word, of course, is strategically. Used recklessly, credit cards can instill even more financial pain on your family. But if you carefully use some of the best cashback credit cards, you will find yourself with more hard-earned money in your pocket.

Tips on Strategically Using Credit Cards

Before describing some of the ways that credit cards can help you amidst this uncertainty, an important point must be made. That is the fact that all of these benefits and strategies are moot if you cannot make your monthly payments. Failing to make your monthly payments can result in onerous interest payments, which can be financially devastating. Even if there is a compelling signup incentive for one popular credit card or exciting purchase rewards for another, they will be for naught if you cannot pay off your bill. This is rule number one as you think about strategically using credit cards amidst COVID-19.

Now, onto the good news. Here are some of the many benefits that you can get if you strategically use credit cards:

  • Compelling credit card offers. There are plenty of credit cards out there today, including those from popular UAE banks, that offer terrific sign-up bonuses. All you’ll need to do is make a certain number of purchases within a specific timeframe to receive the bonus. For instance, with the FAB Cashback Credit Card, you can obtain AED 300 on your first retail transaction. You could theoretically make small purchases on this First Abu Dhabi Bank (FAB) Credit Cards and use your cashback reward for some other pressing purchases in your life.
  • Cash back rewards. Some of the best credit cards offer up to 5% cash back on certain purchases. You will want to read the fine print to determine which purchases qualify for some of the most compelling cashback offers. That said, every credit card awards you cash back or points, which can be used to redeem flights and more. To save money during this crisis, think about strategically using your cash back rewards. For instance, when you are grocery shopping, use the credit card that gives you the most cash back for your grocery purchases. Planning in advance can add some cash to your pocket.
  • Credit card offers with zero percent interest for an introductory period. Simply put, if you miss a payment during an initial zero-interest period, you won’t have to pay interest. These credit cards can be game-changers in paying down your principal, especially if you are pursuing a balance transfer. However, the introductory period doesn’t last forever. Typically, these credit cards will have a significant increase in your APR, so keep that in mind if you leverage this strategy.
  • Insurance benefits. Credit cards can go a long way in protecting you from fraud. Compared to making purchases through a debit card, it is much easier to dispute and remove unauthorized charges. No one ever likes being a victim of fraud, but the pain can be especially stark in this period of uncertainty. Ultimately, credit cards can remove some of that uncertainty by protecting your account from unauthorized purchases and other types of fraud.
  • Credit shields. Credit cards can also be helpful if they offer so-called credit shields. Credit shields are programs where you can pay a monthly fee now in exchange for future leniency if you’re unable to pay off your credit card. For instance, if you later lose your job due to COVID-19, you may be able to suspend payments and interest, keep your account in good standing in the eyes of credit bureaus, or only make minimum monthly payments. These benefits, to put it lightly, can provide an immense amount of financial relief.
  • Return protection. In this time of uncertainty, return protection can offer you some added flexibility. Essentially, it gives you extra time to return new items that you don’t want to keep. Even though a store may reject your return for not being timely, your credit card may be able to reimburse you for your purchase. For this benefit, you’ll definitely want to read the fine print. Assuming your credit card offers it, however, it can be a way to get some cash for purchases you intended to return.
  • Free credit score information. In these challenging and uncertain times, it is important to maintain a good credit score. That said, checking your credit score can be complicated. Generally speaking, it costs money to check your score. Some credit cards, however, offer this service for free, allowing you to skip these fees and get a granular look at your financial health. While the fee may not be too onerous, every dirham saved is valuable.
  • Tracking your payments. While it may not be the most exciting task, tracking your credit card purchases can be extremely insightful. You can get a granular look at your spending habits and cut back as necessary. Strategically using credit cards is all about building smart habits, so create a weekly (or monthly) practice of examining your charges. It can be extremely insightful.

Taking Control of Unique Opportunities

Credit cards can be terrific tools to build financial wealth—so long as you use them responsibly. You’ll need to be disciplined and vigilant, whether you just signed up for a popular credit card for its signup bonus or took on a zero-interest credit card for a balance transfer.

But having said this, it isn’t an impossible task. By being responsible, you can have access to a swath of rewards and cold, hard cash. Even amidst a global pandemic, this is an outstanding time to take advantage of everything that credit cards have to offer.

Soulwallet is a personal finance comparison portal in the UAE. With a team of “out of the box” thinkers and a deep understanding of the UAE consumer banking industry, we help customers make the best choices while shopping for financial products such as credit cards and personal loans in UAE.

balance transfer

Five Reasons to Consider Doing a Balance Transfer on Your Credit Card

The sudden rise of COVID-19 has presented varying degrees of economic stress among UAE residents. Institutions like the UAE Central Bank and some of the UAE’s biggest banks have acted swiftly to relieve some of this unexpected, yet very real financial pressure. Yet even with that assistance, this is a great time for all UAE residents to take a hard look at their current finances.

There are several ways that you can proceed, but we believe that one of the first things you should do is closely look at the balances on your credit cards. For many of us, our credit card balances are some of our highest payments per month. While we may be able to pay off our monthly credit card balances during “normal times, COVID-19 this increased time of uncertainty may make those payments much more difficult.

If you are feeling this type of financial pressure, you may want to seriously consider something called a balance transfer. Balance transfers, put simply, let you move high-interest debt onto another credit card that has a lower interest rate. By doing this, you can keep some of your hard-earned money in your pocket.

To better understand the power of balance transfers, we want to highlight five reasons why you should consider them. Whether one or all of the reasons resonate with you, we believe balance transfers can be compelling options in this era of COVID-19.

Five Reasons to Consider Balance Transfers

The first reason to go forward with a balance transfer centers on your current credit card interest payments. Simply put, balance transfers can temporarily eliminate a high annual percentage rate on your current credit card, allowing more of your payment to go toward your principal. If you are in deep credit card debt, this is a huge deal. A significantly lower (or even zero) interest rate means that you are getting significantly closer towards a zero balance. Therefore, even if there is a small fee to complete a balance transfer, a lower APR may be worth it.

Directly tied with lower interest payments is the ability to save cash in the long run. It’s pretty simple. Allocating more of your monthly payment to your debt outstanding rather than interest is going to keep more cash in your pocket. It is a substantial step on your way toward financial freedom. A balance transfer can offer that unique opportunity, letting you have a few key months where you can make your outstanding principal more manageable.

Balance transfers can also be a great idea because they may be able to raise your credit score. The effect isn’t direct, but there are some ways that your credit score can be improved with a balance transfer. Most notably, it can reduce your credit utilization ratio. This is assuming that you don’t close your old credit card account. Along with paying off your principal, you may see a bump in your overall credit score.

Fourth, a balance transfer can help you build good habits and instill discipline. One primary reason why borrowers seek balance transfers is to obtain some breathing room from overbearing interest payments and debt. Balance transfers can provide this, but they also provide great opportunities to get into great financial habits. For instance, paying down your balance every month and spending less than you make are terrific habits to build.

Finally, credit card balance transfers can make you happier. They can provide both short-term and long-term financial relief. By capitalizing on this relief and getting a better hold over your finances, you’ll feel happier and less stressed. This is a real benefit—especially as we are living through COVID-19.

A Compelling Option

These are just some of the benefits of credit card balance transfers. Granted, you will want to read the fine print and find a balance transfer that makes the most sense for you. Some balance transfer arrangements have a low (or zero) APR, but ramp up significantly after several months or if you miss one payment.

Even so, balance transfers can be a valuable tool in personal finance. Whether or not you choose to use this tool, we encourage you to do your research. You may find that a balance transfer is just the thing you need to get your financial freedom.

Soulwallet is a personal finance comparison portal in the UAE. With a team of “out of the box” thinkers and a deep understanding of the UAE consumer banking industry, we help customers make the best choices while shopping for financial products such as credit cards and loans.

All You Need to Know About Islamic Finance

Whether you are searching for a personal loan or financing for a home or vehicle, you can take advantage of many financing opportunities in the UAE. Having said that, we want to use this post to discuss one type of financing category. That category is Islamic loans.

While Islamic finance only constitutes 1% of global financial assets, it is a rapidly growing area of finance—particularly in the UAE. Specifically, Islamic loans in the UAE are a fantastic way to accomplish some of your financial goals. Also called Sharia loans, these loans, as you can guess, comply with Sharia law. While they work slightly differently than “traditional” loans, Islamic loans can be a great option to finance major purchases in your life.

Sharia Loans: Some Basics

Islamic loans are unlike other types of loans for several reasons. However, the main differentiating factor is that they must comply with practices and prohibitions under Sharia law. One of the most notable restrictions for Sharia loans centers on paying or charging interest. Sharia law says that interest is usurious, meaning that it is strictly prohibited. To put it another way, with Sharia loans, there are no fixed or floating interest rates or fees.

There are many other restrictions on traditional financial instruments under Sharia law. For example, an investor or borrower under Sharia law cannot invest in businesses involved in prohibited activities, speculate or gamble, or purchase derivative contracts or engage in short selling. In the personal finance context, however, this prohibition on interest is the most striking difference with Western finance.

That said, lenders underwriting Islamic loans in the UAE still need to make money. So how do they do it? Ultimately, it comes down to Islamic banks buying a desired product or commodity on the borrower’s behalf. After doing this, Islamic banks can lease the underlying product to the borrower. They can also re-sell that product on installment at a fixed price. This price, however, is often higher than the traditional market value.

Islamic loans in the UAE offer these types of arrangements. Even though Islamic banks aren’t necessarily charging interest, they are being compensated for the initial risk of purchasing the underlying product or commodity.

The Best Islamic Loans in the UAE

 With this basic understanding in hand, you may be curious about how you can obtain Islamic loans in the UAE. The good news is that there are plenty of opportunities to capitalize on the best Islamic loans in our country.

For instance, there are some great FAB Islamic loans. First Abu Dhabi Bank is one of the most renowned financial institutions in our country. It not only provides capital and services to large corporations, but to individual borrowers like you. These FAB Islamic loans are specifically tailored Sharia-compliant solutions that can help you purchase everything from a home to a car. If you intend to purchase a new home, you can obtain up to AED 20 million in financing and can leverage flexible payment periods (up to 25 years). If you’re in the market for a new car, you can get financing of up to AED 1.5 million and up to 80% of the car’s value. There are eligibility requirements for all of these FAB Islamic loans, so you’ll want to read the fine print before proceeding.

FAB Islamic loans are just one example of some of the best Islamic loans available in the UAE. That said, you will probably want to start looking for opportunities with your current bank. See if they offer Sharia loans for your intended purchase and feel free to reach out to your bank as necessary. In all likelihood, you will find an Islamic loan in the UAE that best suits your financial circumstances and your intended purchase.

Finding the Best Sharia Loans in the UAE

Sharia loans can be a great way to finance a large purchase in your life. Even if you can pay for your purchase in hand, Islamic loans can relieve financial pressures in your life. Therefore, we encourage you to complete your due diligence. If you have any questions, don’t hesitate to contact your banker. Doing this, we’re confident that you will be satisfied with your next Sharia loan.

Soulwallet is a personal finance comparison portal in the UAE. With a team of “out of the box” thinkers and a deep understanding of the UAE consumer banking industry, we help customers make the best choices while shopping for financial products such as credit cards and loans.

All You Need to Know About Smart Payments in the UAE

Living in the UAE, there is a wide variety of ways that you can pay for your goods and services. Most obvious is paying with your physical credit card. Whether you are a Deem Finance Platinum credit card holder, an Emirates NBD Titanium card holder, or something else, we are sure that you are heavily relying on your physical credit card to make your daily purchases. It’s such a natural habit that, in all likelihood, you don’t even think about it.

That said, we are now part of a digital-first world. Smart payments is one of the fastest-growing and most exciting ways to pay for many things in your day-to-day life. By leveraging the Internet and near-field communication (“NFC”) technology, you can more easily pay for your goods and services. Moreover, you can easily monitor your purchases and identify where most of your cash is going.

In this post, we want to highlight some of the smart payments solutions that you can find in the UAE. At the end, you will have a better understanding of how you can leverage smart payments in your own life.

Apple Pay

To start, one of the most prominent smart payment methods in the UAE (let alone the world) is Apple Pay. Apple Pay is a fantastic way to pay for many types of goods or services in your daily life. Even better, Apple Pay works with many major credit and debit cards that are made available from UAE banks. Some of those banks include Abu Dhabi Commercial Bank, Emirates NBD, and Sharjah Islamic Bank. Whether you just purchased an iPhone or have been an Apple power-user for some time, you’ll be sure to enjoy Apple Pay.

Samsung Pay

Along with Apple Pay, Samsung Pay is prominent in the UAE. According to the company, Samsung Pay is “accepted at more places than any other mobile payment service out there.” Essentially, you can use Samsung Pay basically anywhere that you can swipe a card (along with mobile and Bixby retailers). With Samsung Pay, you can easily select your preferred credit card on your Samsung mobile device, verify your fingerprint, place the device over the retailer’s card reader, and pay for your purchase. Supporting banks and financial institutions include Noor Bank, Ajman Bank, Emirates NBD, and more.

Google Pay

Google is not only a juggernaut in the world of online search engines. The Silicon Valley giant has created Google Pay, which lets you pay on sites, in apps, and in stores with credit cards that are saved to your Google account. Compared to its main rivals in Apple and Samsung, Google Pay prides itself on security and ease of use. Because you are likely using many Google products in your daily life, Google Pay can be a compelling option. Like the others listed above, supporting banks in the UAE include well-known financial institutions like Mashreq, Emirates NBD, and RAKBANK.

Contactless Payments

Finally, another smart payment solution in the UAE centers on contactless credit cards. Instead of opening an app, you take out your credit card (a Visa card, for instance) and simply tap to pay. Tap to Pay with Visa, for example, lets you more quickly use your Visa card with millions of merchants around the world. Contactless payment solutions are yet another way to keep your cash in your wallet and pay for your items more easily and more securely. In fact, with Tap to Pay with Visa, you can even pay for your next meal or purchase with your smartwatch. It’s almost like magic.

Embracing the Smart Payments Revolution

Ultimately, we believe that smart payments are here to stay. Whether you are a passionate Apple or Samsung user or simply want to make the payment process easier, we encourage you to check out the options above. Each of them has their pros and cons, so you’ll want to complete some more due diligence before you make your decision.

Being in the early days of the new decade, we can’t wait to see how the smart payment landscape changes in the next ten years. Predicting the future is always difficult, yet we are certain that smart payments will become an even larger part of the UAE’s financial landscape. We can’t wait to see what happens next.

Are You Carrying the Right Credit Card in Your Wallet?

Credit cards make life easier – boost our purchasing power and makes big-ticket purchases much easier. They offer financial convenience in times of an emergency and come with a range of different benefits.

Credit cards offer ease of transactions and can also become a source of savings when you choose the right ones and then use them the right way.

Here are three questions that will help you determine if the card you have works well for your particular needs.

1. Does your credit card loyalty program offer the best value to long standing customers?

Credit cards in the UAE offer several exciting features for new cardholders that usually are for a limited period only. Alluring signup bonuses, zero-interest periods, waived annual fees and many more schemes are available for new card applicants.

However, what rewards do these credit cards offer over the long term?  This is vital information that one should check before deciding on the most suitable credit card. This will also help you decide whether it’s worth sticking with your existing bank’s credit card or if you indeed need to change and would be better off with another option.

The rewards offered for signing up are one of the main reasons people switch credit cards frequently. Consumers usually change cards for the better rewards program and to take advantage of signup offers that last for a limited period only.

It is important that the credit card you have chosen offers you good value for both short term and long term as well. An attractive signup bonus offer, a 0% interest period, no annual fee for the first year, or high spending rewards and other such perks must be attractive and indeed competitive over the long term and not just during the initial signup offer period.

The whole package of benefits to suit your lifestyle and spending patterns must be balanced between immediate rewards and long-term value. Your credit card must be suitable for your everyday purchases and your typical spending patterns.

If you can continue to enjoy great benefits from your credit card over a long-term without incurring additional costs and with minimum efforts, then it is worth considering to keeping on with you.  But if the ongoing benefits are not appealing it is definitely worth looking out for a better option.

2. How well does your credit card rate for the features that you use most?

The credit card in your wallet must have the incentives suitable for your spending patterns and lifestyle. There are a set of distinctive perks available on different credit cards offered by various UAE banks.

Hence, begin analyzing your spending patterns by accessing your credit card statements. Note down expense categories on which you spend the most as this can help you identify the credit card that best rewards that type of spend.

For instance, frequent travelers would be better off having a credit card that offers rewards on airline tickets and hotel stays and benefits such as airport transfers and VIP lounge access. Such credit cards typically have an annual fee component but frequent travelers generally gain back the value from the perks and rewards offered.

There are also credit cards with travel benefits that fit the needs of travelers looking for best deals, such as discounts on travel, dining and hotel stay along with the flexibility in reward redemption.

If you use your car a lot then it would be advisable to check for credit cards that offer fuel discounts, gas credits or rewards features on amounts spent at gas stations.

If you love playing golf – an expensive hobby to keep up, owning a credit card that has exclusive privileges on golf like a free tee-time once or twice every month at selected locations can be a good choice. Movie lovers will benefit if their credit card offers them a buy-one-get-one cinema ticket or similar movie discounts. When eating out is a weekly habit for you, dining discounts and perks on the card is a must.

For those who live a simpler life and spend only on basic necessities, cards offering cashback or rewards on groceries and other retail expenses can be the most rewarding. Hence, do review your regular expenses to choose a credit card that best rewards your lifestyle.

3. Is the type of credit card you carry, giving you the right value-based your lifestyle?

Credit card operators offer perks to customers differentiating their value-added services such as cashback, miles or rewards programs. When looking for real value on your credit card, it’s vital to match the type of card perks with your spending needs.

Cashback cards help cardholders get a percentage of their spend back on specific expense types incurred on the card. If you are a frequent credit card user then even a small percentage rebate can help you save money. Cashback earned is usually directly credited to your credit card account as money back.

Cashback on a flat-rate credit cards typically pay anywhere between 0.75% to 1.25% for all purchases whereas tiered and bonus-category credit cards give higher cashback rates at selected merchants or on certain types of purchases (groceries, school fees, fuel etc.) but with a nominal (usually 0.25% to 1%) reward on all other purchases.

So if you prefer some extra money in your pocket than other rewards, a cashback credit card could be the answer. However, do keep in mind that even cashback offers come with their own terms and conditions – prominent ones being a minimum spend requirement and maximum possible cashback restrictions (or caps).

For travel enthusiasts credit cards that offers air miles as a reward could be a better option. These cards provide higher miles on travel purchases and international spending made via the credit card.

It is true that joining bonuses are often the most attractive reasons to apply for a new credit card. However, in the following years, you’ll need to spend more to gain attractive rewards, especially if the card has an annual fee.

When redeeming miles, also note that there could be blackout dates, airline restrictions, or booking instructions that you will have to consider. Reward points offered on credit cards in the UAE are very diverse. You can accumulate reward points against spend and then redeem these points for various items – shopping vouchers, gifts, and even air miles. However, similar to cashback, these rewards credit cards also sometimes have an expenditure cap attached to them.

 

As is most often the case, there is no perfect credit card for everyone. But there could be definitely a perfect credit card best suited to your individual purchase patterns and benefit preferences. Taking that little extra effort to “align” yourself to the best credit card for ‘you’ can not only help maximize your savings but also provide you with meaningful benefits to enjoy.

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.

 

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.

 

 

How to choose between Personal Loan & Salary Transfer Loan

How to choose between Personal Loan & Salary Transfer Loan

Cash loans are a popular lending product in the UAE. These loans come in handy to service an immediate need which can be a purchase, holiday plan, school fee payment, medical expense not covered by insurance and so on. Cash loans offered by UAE banks can be classified into two categories.

a. Salary Transfer Loan: This is most probably the first loan one can avail from the bank where the customer holds a salary account. These loans are low in interest rates compared to the other personal loans without a salary transfer. Banks offer competitive interest rates for their customers for such loans. These loans generally require the following eligibility criteria.

i. A Salary Transfer letter from the employer of the customer stating that Salary would be transferred to the bank along with certain other clauses as required by the respective bank. Your HR department can help you with issuing such letter.

ii. A minimum salary requirement which might differ from bank to bank. This generally starts from AED 5000.

iii. Security checks as required by the bank.

iv. Debt ratio including the new loan EMI should not exceed 50% of monthly income which is a simple calculation of your total financial monthly liabilities over monthly income.

v. All other eligibility criteria as applicable by the bank including a meeting with the borrower.

b. Personal Loan without a Salary Transfer: These loans are offered by banks without a need of having Salary transferred. Such loans are popular and can serve the purpose when one already has a Salary Transfer loan running with a bank. Interest rates are higher for such loans and the lending amount might be lower than a Salary Transfer loan.

It is important to understand the difference between the personal loan and the salary transfer loan before applying for a loan. Reaching out to your bank which holds your salary account and enquiring for a salary transfer loan should be your first option. However, there are banks in UAE which provide attractive interest rates and higher loan amounts for the personal loan without salary transfer. SoulWallet can help you compare and choose the best personal loan and salary transfer personal loan from banks across UAE. Also you can apply for loans online.

Here are the key points to consider while deciding upon a loan?

a. Am I getting the best interest rate?
Most banks offer interest rate based on a multiple criteria like your income range, employer, bureau score etc. These rates are generally available with the Sales Executive who reviews your application profile. Make sure you review the interest rates before signing up. High interest rate means higher EMI and longer repayment period.

b. Am I getting the loan amount to suit my need?
Different banks offer different loan amounts, generally a multiple of your monthly income. This obviously can be customized based on certain criteria as mentioned in the previous point.

c. Will borrowing a loan be a hassle free process?
Loan application processing might take anything from an hour to 5 working days. Ask whether the process is simple and hassle free as this is a key differentiator between the financial institutions.

d. Are there any Hidden Charges?
Review if there are any charges pertaining to loan processing, early repayment penalty, late
payment etc. Read the fine print. Or at least ask the Sales Executive. You can always go and check comparison sites like SoulWallet.

e. What are the Payment Options?
Understand the various payment options available to you. While a direct debit from your salary
account is a standard process, there might be situations one would need to make a payment
through alternate methods. These options must be easy and inexpensive.

f. Will Top-up loan be available?
Enquire on when one can avail a top up loan while servicing first loan. Some banks have a resting
period of 6 to 12 months from the time the first loan has been issued.

g. Will there be Statement and Email alerts?
How does one get reminders on payments and loan balance? Verify this as these are important to know while servicing a loan. In today’s forgetful and fast paced life, we tend to forget the payment date. Bank might charge a penalty for late payment.

h. Any Special Features?
Does the bank offer a flexible interest loan which can adjust over a period of time based on EIBOR (which is Emirates Inter Bank Offered Rate).

So Salary Transfer Loan or Personal Loan Offers. Choice should be yours.