UAE | General
Debt traps UAE's summer travellers
Many residents tell Gulf News they have fallen into the debt trap to cover holiday costs.
- By Anjana Sankar, Senior Reporter
- Published: 00:04 May 30, 2008
- Many admitted they fell into the debt trap, as they do not want to compromise on their vacation plans.
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Dubai: There are tickets to be booked, gifts to be bought and holidays to be planned as the summer holidays approach. This is the time of year when borrowing is at its peak, as cash-crunched families grab any financial assistance they can find.
Nobody knows this better than banks, as is evident from the wide range of enticing offers on credit cards and personal loans that are aggressively being marketed by sales staff.
Many residents said they get at least two or three calls a week from banks, offering them "free for life" credit cards and "no salary transfer needed" loans. Many admitted they fell into the debt trap, as they do not want to compromise on their vacation plans.
Four tickets
"I have to book four tickets to India for my family before July, in addition to shopping expenses, and I do not have a penny in my account. It is already late and seats are getting fully booked. I have no other option but go for a credit card. I have already applied for one," said Jojo Mathews, a father of two.
He added that a sales agent from a local bank persuaded him the credit card was "free for life".
"I had asked some of my friends for money, but they were all facing the same problem. When the salesman approached me saying that I could get a credit card within a week, I could not resist," said Mathews, an assistant sales manager who works at a Jebel Ali free zone company.
Junaid Jehan, a sales executive, said he has just received his fourth credit card, this time to get money for his sister's wedding, scheduled for July in Pakistan.
"I have three credit cards that I applied for when I experienced some kind of financial difficulty. This time I have to bear the wedding expenses. Back home my people would not understand the difficulties I face here," said Jehan, adding that the quick and easy procedure to apply for credit cards is a great temptation.
Sales executives who work in the credit card and loan sections of various banks told Gulf News they are under pressure to push sales during the months of May and June, by targeting expatriate families who will be going home for their annual leave when schools close for summer holidays by the end of June.
Anwar Ali, who markets credit cards for Mashreq Bank, said his job requires him to make 50 sales calls a day.
"Our target is to open at least 20 credit card accounts a month. This month, people are showing more interest and I am pretty close to my target," said Ali.
G.N., another salesman, at Emirates Bank, said he has already issued five personal loans this month.
"All five persons who applied told me they are going to their home country with their families for the summer holidays. Some people get irritated when we call them. But those who are interested always want to know how quickly they can get the loan credited to their account," he said.
Suvo Sarkar, general manager of retail banking at Emirates NBD, said both expatriates and nationals apply for financial products to plan their summer holidays.
"The UAE has a large expatriate population who travel in summer to their home country or on holiday elsewhere. UAE Nationals also travel on holiday to various destinations. As part of planning for their holidays, customers typically apply for various financial products such as credit cards, personal loans and overdrafts," said Sarkar.
Anil Chander, head of cards & business strategy at RAK Bank, said they do experience a marginal increase in issuing credit cards before the summer months.
"This is not as pronounced as it used to be since now customers tend to travel all year round. The level of card penetration is also fairly high. But the level of spending activity is definitely higher in the summer months due to travel and travel related costs," he added.
Regarding the bank's sales strategy for credit cards, Chander said: "We do not believe in forcing credit cards onto customers who may have the need for money but who may get themselves into trouble with more debt."
Do you know anyone who has taken a loan to finance their holiday? How long did it take them to re-pay it? Tell us at letter2editor@gulfnews.com or fill in the form below to send your comments.
Your comments
Credit cards and personal loans are available to assist anyone, but with the main purpose of getting profit for the bank.
Avail these cards and loans for it is main purpose which is to assist us financially. do not abuse use of these cards and loans otherwise we would be put on trouble and gain more profit on these financing institutions.
Mil
Dubai,UAE
Posted: May 30, 2008, 15:01
There are so many hidden charges that your loan will never come to an end.
Sar
Dubai,UAE
Posted: May 30, 2008, 13:42
I was offered life-time free credit cards two years ago and I took both and started using them, thinking I would not have to pay any extra as there were 55 interest-free days on offer. I was shocked when I started receiving statements after three months. I was also charged a "Financial Security Fee".
AbdulGafoor
Dubai,UAE
Posted: May 30, 2008, 11:32
Money which is not yours is not yours to spend. It is a simple idea which will help one plan life better. I am a man who went under severe debt thanks to my habit of depending on loans and credit cards to make ends meet. I have seen how exactly the banks will ensure that you don't breathe or rather don't live at all when you go down that line. Luckily one morning I decided enough is enough and cut down all the costs. Moved down to Ajman and started life on a clean slate. I was down AED 200,000 that time. Today I have cleared all my loans, shifted back to Dubai and living a life much better than anyone. But my principle is here to stay. Say no to cards and loans. Tighten your belts when in trouble.
Anees
Dubai,UAE
Posted: May 30, 2008, 09:34
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