Dubai: Despite horror stories of people getting burned with bad debt, late fees and interest rate charges, the appeal of plastic money never seems to fade.
More people have opted to go cashless when shopping in UAE, with the number of credit card applications rising by more than half from 2015 to 2016, according to the latest analysis.
Financial comparison site compareit4me, which allows UAE consumers to sign up to payment card products online, said there were 54.75 per cent more users applying for credit cards in 2016 compared to a year earlier. Most of these applications were for non-Islamic credit cards, which registered a surge in applications of 134.23 per cent.
The rise in applications could mean that consumers are open to spending more on credit or that banks are aggressively selling payment cards, especially within the high-income bracket.
“UAE banks in the region have been aggressively targeting customers earning over Dh20,000 per month. So the numbers we’ve seen could also be a reflection that the banks’ targeting strategies paid off in 2016,” said Samer Chehab, COO at c ompareit4me.com.
However, there’s a view held by many UAE residents that credit card usage has only gone up because of unsolicited credit card offers. Banks have reportedly been signing up customers to credit card products without prior consent.
Luisa (name changed), a Dubai-based expatriate from the Philippines, wasn’t at all pleased when a credit card showed up in the courier on Monday. That was the second card she received from the same bank this year, and she swore she had never applied for one. Apparently, she wasn’t the only one who got the unsolicited card.
“Do you know that I never requested for this? I’m just accepting the delivery because I don’t want the card to fall in the wrong hands,” she recalled telling the delivery guy. The courier said he had just handed over 25 other cards and all of the recipients asked the same question, 15 of them turned the parcel away and ten ended up receiving them.
Luisa doesn’t want to go through the hassle, not to mention the dangers, of getting tied to a credit card, so she called up the bank to ask them again to drop her name from their list.
“My car loan is with them and it will be paid by September 2017. In April last year, they sent me a credit card as well.” But even cancelling an unused card isn’t a breeze. When she rejected the first card and requested for a clearance letter, she was asked to pay Dh100.
UAE residents who no longer have any relationship with their previous banks are getting unsolicited credit card offers as well. Another expatriate working as an architect in the UAE had earlier complained that a top lender in Dubai had signed her up to a credit card without her consent.
“I am not their bank customer as I paid my loan to them and closed my account years ago. However, I am very surprised that they can easily issue a credit card that I didn’t apply for under my name without my knowledge,” she said.
Still, compareit4me’s analysis showed that people are applying for credit cards, no matter their income. In fact, applications were up among most salary bands in 2016, with the number of applicants earning Dh5,000 to Dh9,999 rising by 58.77 per cent.
Those with paycheques between Dh10,000 and Dh19,999 also showed more interest in credit cards, with 141.53 per cent more people in that band applying for credit cards than in 2015.
The demand could also be attributed to consumers’ growing interest in cashback offers. Demand for credit cards offering cashback on utility, telecom and school fee payments almost doubled during 2016, compared to 2015. This suggests that many consumers still want to use credit cards to save money wherever possible.
“There certainly seems to be an understanding among consumers that, if used appropriately, credit cards can deliver savings on everyday expenses,” Chehab explained.
