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How to Cope With Your Personal Finances and Debt Amidst COVID-19

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COVID-19 has been one of the most disruptive public health and economic stories in recent memory. The UAE has 42294 total confirmed cases (source https://doh.gov.ae/covid-19 as of 15th June 2020) and there will undoubtedly be more. Moreover, shelter-in-place orders and nightly curfews throughout major cities across the world (including in the UAE) have caused massive ripple effects throughout the global economy.

Even though the UAE has a relatively low case count compared to other nations throughout the world, it isn’t immune to the economic stress. In fact, you may be experiencing some of these financial pressures right now. It can be scary—especially because it’s unclear when normal life will return.

Having said this, there are reasons to be optimistic. While the situation is constantly changing, we wanted to share several personal finance suggestions and resources that you can leverage in these uncertain times. These resources will help you obtain some financial relief (and even unlock exciting financial opportunities) as we continue to battle COVID-19.

Take Stock of Your Current Finances

Generally speaking, one of the first things that you should do amidst this economic uncertainty is to take stock of your current finances. Take a look at your cash in hand (if any) and note any upcoming bills or payments, whether it is your rent or mortgage, credit card bills, or something else. If there is a significant chance that you cannot meet any (or all) of these upcoming liabilities, you’ll want to take action now.

We will shortly describe some of these opportunities provided by the UAE government and financial institutions. Putting that aside, you may want to contact your credit card companies and lenders if you feel like you cannot pay your bills on time. While there are no hard and fast rules here, your lenders may be able to defer some of your payments if you explain your current financial situation.

Whether or not you are facing imminent financial pressures, you will want to adopt more stringent spending habits. Think long and hard about your discretionary purchases. While you may have been eyeing that new car or purse for some time, it’s probably better to be conservative here. It’s unclear when the economic pain from COVID-19 will end, so cash is king. Cash gives you optionality and will eliminate some stress if this crisis lasts longer than expected.

On a more optimistic note, COVID-19 can be a great investment opportunity if you have savings or significant discretionary income. Asset prices have fallen in the UAE and throughout the world. Because of this, you may want to think about purchasing index funds or other equities. As we’ll describe below, the government is also offering incentives for first-time homeowners. You will clearly want to do your own due diligence, but the bottom line is that this may be a great time to enter the markets. However, if you foresee any near-term financial pressures, you will likely want to stay liquid and keep cash on hand rather than make any long-term investments.

The bottom line? As with all personal finance advice, you need to closely monitor your income and spending habits. Stay conservative and make sure that you’re not spending more than you are making. And if you foresee any potential issues paying your current or upcoming bills? We encourage you to speak with your lenders and take advantage of the financial relief described below.

Financial Relief and New Incentives

Because of the sudden disruption that COVID-19 has caused, the UAE government has ordered banks and other financial institutions to provide relief to individuals and families. These are some compelling opportunities, so we encourage you to pay close attention.

For instance, if you have a mortgage, car loan, or personal loan, you can apply for a one month repayment holiday with no extra fees. Borrowers who have been financially affected by the COVID-19 outbreak may also be able to obtain loan repayment deferrals for up to three months and interest-free installment plans of up to six months on things like grocery purchases, utility bill payments, and school fee payments.

To take advantage of these payment plans and deferrals, you’ll want to follow up with your bank. UAE banks (like First Abu Dhabi Bank and Abu Dhabi Commercial Bank) have moved quickly to support their retail and SME customers. If you bank with a non-UAE financial institution, you will also want to read the fine print to understand all of the incentives that may be at your disposal. As just one example, if you bank with Standard Chartered, you will receive refunds for foreign currency translation fees on canceled travel bookings. Along with this, cash advance fees on credit cards are cut in half. Again, make sure you complete your due diligence so that you can take advantage of your bank’s available incentives.

Getting some more time to pay your upcoming bills can go a long way in providing financial relief. But along with this, you may be thinking that this is a good time to make some investments. First-time home buyers, for example, can obtain a reduced down payment of up to 5% on their home purchases. You can also obtain interest-free installment plans for school tuition. This includes the waiver of service of charges or a 0% interest loan until 30 June 2020. Ultimately, the UAE government has moved swiftly to relieve financial pressure on residents and to spur continued investment in the country. Therefore, don’t hesitate to take advantage of these opportunities (the sooner, the better).

Finally, if you are a small business owner in the UAE, there are additional financial opportunities available to you. For example, you can reduce their interest charges on new borrowings based on new prevailing interest rates for eligible customers. Along with this, you can reduce bank charges by half on the early settlement of existing borrowing for eligible customers until 30 June 2020. For some more financial relief opportunities available for small businesses, feel free to click here.

Riding Out the Storm

Unfortunately, we are likely nowhere close to the end of COVID-19. A potential vaccine is still far away and there is likely more economic pain ahead. We are truly living in uncertain times, so you must be proactive to minimize financial damage from this global pandemic.

The good news, however, is that there are plenty of resources to help you ride out this economic storm. The government has been proactive in helping you defer some of your upcoming payments. Also, there are new incentives to make a long-term investment in the UAE. Ultimately, we encourage you to take advantage of as many of these opportunities as necessary.

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.

Why You Should Use Comparison Websites Before Signing Up for a Credit Card?

Why You Should Use Comparison Websites Before Signing Up for a Credit Card?

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Whether you have great credit or are working hard to improve your credit score, you undoubtedly receive plenty of credit card information or application forms in the UAE. The potential offers and rewards are often extremely compelling, whether it is extra points for eating at your favorite restaurant or travel deals that are only available to certain cardholders. Credit cards also have many different terms, and these terms can become all too real if you are behind on a payment.

Therefore, when analyzing which credit cards in UAE to pursue, it is helpful to compare all of the offers that are available to you. This is much easier said than done. However, You may find yourself placing pieces of paper side-to-side or simply choosing a credit card that your friend or sibling likes.

Luckily, there is a better way. We believe that comparison websites are a true game-changer when signing up for a credit card. These websites make it extremely easy to compare different types of credit cards, thereby making it more obvious to you when making your final decision. Everyone from the first-time credit card holder to more experienced borrowers can find immense value from credit card comparison websites.

Below, you will find several key reasons why these websites are so important in today’s financial environment.

A Clean User Interface

As referenced above, credit card comparison websites make it easier and enjoyable to compare different credit card offers. Many websites, in fact, let you place credit cards side-to-side. They make it seamless for you to compare cards’ interest rates, annual fees, join fees, and more. This side-by-side layout is more effective than you may think, as it quickly gets to the crux of why certain cards are better for you than others. Instead of spending hours sifting through the paperwork and comparing the fine print, you can get a great first glance through credit card comparison websites.

Opening Your Eyes to New Opportunities

Credit card comparison websites aren’t just for comparing credit cards that you are considering. Arguably just as valuable (or even more valuable) is the fact that you can use them to discover new credit cards. For instance, if your most important factor is a low interest rate, you may use a credit card comparison tool to find a low-interest card that you haven’t even considered yet. This is just one simple example, but the discovery nature of credit card comparison websites makes them attractive to credit card applicants.

Helping You Maximize Your Points

In the example above, we explained how credit card comparison websites can help you find low interest card cards, thereby saving you cash if you end up making a late payment. But the flip side to this, however, is that credit card comparison websites can help you maximize potential incentives. If you enjoy traveling, for instance, you can find a new credit card that caters to travelers. Moreover, the website will help you understand how you can maximize your points so that you can rack up free flights or vacations. To put it another way, these websites are your trusted guide to get the most value out of a potential credit card.

A Godsend if You Have Bad Credit

Finally, credit card comparison websites can be especially helpful if you have bad credit and are looking for a new credit card. Repairing or strengthening a credit score is always time-intensive. That said, this shouldn’t mean that you can’t find a great credit card now. Credit card comparison websites can help you with this task. They can highlight some of the most attractive options for you—considering your financial situation.

Your Secret Weapon

These are just several key reasons why credit card comparison websites are so powerful. They are simple and easy-to-use, yet extremely powerful. They can help you stumble upon key insights about your spending goals and budget. They can even be a massive assistance in helping you more quickly save up for your dream vacation.

Whatever the case may be, we encourage you to check out these websites. Spend some time reviewing both the websites themselves and the credit cards that they let you compare. In sum, we  believe that credit card comparison websites can be your secret weapon as you work toward achieving all of your financial goals.

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.

COVID-19

Analyzing Positive Long-Term Effects of COVID-19 in Our Lives

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COVID-19 (also known as the “coronavirus”) has disrupted the UAE and the rest of our world. From bans on public gatherings in the United States to the closure of restaurants, bars, and even sports leagues, the coronavirus has quickly changed day-to-day life.

It is all too easy to focus on these negative headlines. Anxiety is rampant and the world seems much darker in the near future.

But having said this, life as we know it is not going to end. We will get through this. Moreover, once this crisis fades, we believe that there are some extremely positive consequences that will make life better, healthier, and more enjoyable.

Positive Effects from the Coronavirus

Some of the more prominent changes from the COVID-19 crisis will center on our work lives and human interactions.

Even before the spread of the coronavirus, remote work was becoming increasingly important for knowledge economy workers. COVID-19, however, is a substantial catalyst that is going to unlock plenty of remote work opportunities in the UAE and around the world. Employers will increasingly notice that at-home employees are happier and more productive. To continue training their teams, employers will also utilize online coaching and counseling tools. Even though in-person work will not disappear, remote work is going to be a mainstay of our lives.

Aside from work itself, the coronavirus is going to make our world more digital. New social media users and applications will emerge—all leveraging the power of video. Wi-Fi will be free and available everywhere. We may even see virtual reality and augmented reality play an even more important role. Simply put, the world will become even more digital, allowing us to remove physical boundaries and connect with others from the comfort of our own homes.

Next, COVID-19 is going to dramatically reshape global healthcare. Again, we’re likely to see a digital-first approach here. It is going to be completely normal to get health checkups and treatment from our homes. DIY self-administered medication delivered to our front doors will also be more prevalent, allowing us to bypass visits to a doctor’s office or pharmacy. More serious illnesses or ailments will still require us to seek in-person care. That said, digital diagnosis and treatment are going to lead to a more convenient and healthier future.

COVID-19 has already rocked the business world in the UAE and throughout the world. Even though a global recession may already be here, we believe that the business world is advancing even more rapidly toward significant changes. First, ecommerce and digital channels will be the primary (or even sole) revenue channels for some businesses. Businesses will need to be creative to better serve online customers. Digital Wallets will be used widely. Cryptocurrency having operated in an unregulated market has expanded amid major upheaval, financial scandals, bankruptcies and mounting skepticism. With players such as Litecoin, Ripple, Mintchip, Tether, Ethereum, Libra, Monero and several more emerging, cryptocurrency will evolve from the nascent stage and gain momentum and better customer acceptability. All of this will lead to better experiences and more security for customers.

Finally, education and food are going to rapidly transform. In terms of education, distance and online learning will become even more prevalent. While children will face challenges in developing social skills, remote learning will grant us easy access to the best educators and experts around the world. As for food, the coronavirus is going to catalyze new and innovative catering options at home. More people will begin to grow their own food and renewable energy will be more commonplace (and necessary).

A Dramatically Different World

COVID-19 may or may not be a “Black Swan” event, but the effects of this global pandemic are going to be long-lasting. Even though there is some short-term pain, we believe that there will be long-term gain.

Day-to-day life is going to be more digital and less analog. We will connect with others through the power of digital technologies. The home is going to become much more important in our day-to-day lives, whether we are looking for our next meals or simply trying to diagnose a mild illness that we have.

In the UAE and around the world, we must prepare ourselves for these changes. As with any change, the transition may be difficult. However, we strongly believe that modern-day life is going to be better after this crisis. In the interim, we must stay positive and look out for each other. This crisis will end, and we will be in a great position coming out of it.

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

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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.

credit score

Maintaining a Good Credit History: Some Helpful Tips and Strategies

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Whether you are seeking personal loans to pay off outstanding debt or simply want to obtain some new credit cards, one of the first things that lenders will do is check your credit history. Your credit score, as calculated by the AECB (Al Etihad Credit Bureau), is essentially a profile of your financial health. It is something that lenders in the UAE closely scrutinize before deciding to extend you credit.

Because of this, it is extremely important to maintain a good credit history. Doing so will make it much easier to get access to some of the best credit cards in the UAE today. Having a poor credit history, however, will make it much harder to accomplish your financial goals.

In this post, we want to share several important tips and strategies on how you can maintain a good credit history. Following some (or all) of these tips, you’ll drastically increase your chances of avoiding any unpleasant surprises and increase the chances of getting the loan or credit card that you desire.

Ways to Maintain Your Credit History

To start, one of the best ways to maintain your credit history is to pay your bills on time. It’s simple enough. If you are a borrower that doesn’t skip or delay payments, banks and other financial institutions will view you as more creditworthy. They will have the confidence that you will make your required payments for your  loans and credit cards, thereby extending you more credit than others. On the opposite side, making late payments not only costs you in interest or other penalties, but it hurts your credit score. From there, a lower credit score hurts your chances of qualifying for some of the best credit cards or future personal loans.

Along with paying your bills on time, seriously consider paying off your credit cards in full. This is a great tactic both for the health of your pocketbook and the health of your credit history. Paying off your balance in full helps you avoid interest payments, which can become substantial if you are solely paying the minimum required payment on your credit card. But not only that, paying off your entire balance, once again, shows financial institutions and the AECB that you are a responsible borrower. Your credit score will rise and you’ll be more likely to receive even more generous credit terms in the future.

So one significant part of maintaining your credit history is to be on top of your payments. But that said, another key area centers on credit utilization. By this, we mean responsibly using the credit that has been provided to you. Just because your credit card has a credit limit of Dh100,000, for instance, does not mean that you should draw upon all of that credit. Instead, the general rule of thumb is that you should use only 30 percent of that credit limit. While it isn’t the worst thing in the world if you go above that guideline, you should tread lightly. It may put you at greater risk of being unable to pay off your credit card in full.

Finally, don’t apply for loans that you don’t need. If you already have great credit, it is all too tempting to apply for a wide range of  loans. You may use those  loans to get a more luxurious car or to splurge on something for your home. Whatever item or experience that you want, it is much safer to fund it through your day-to-day savings and cash flow rather than a loan. Yes, it may take longer to find the funds to make the purchase. However, foregoing a loan that you don’t actually need minimizes the potential hit to your credit score. To put it another way, it is an investment in your long-term financial future.

Get Started Today

Obtaining and maintaining a good credit history is an ongoing task. That said, it is certainly doable. Following the tips and strategies above can help you fortify that credit history, allowing you to obtain the best credit cards and personal loans in the future. By staying disciplined and on top of your pending payments, you will be setting yourself up for continued financial success.

Are You Carrying the Right Credit Card in Your Wallet?

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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

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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.

 

Transactor vs revolver – What’s Your Approach with Using Credit Cards?

Transactor or a Revolver – What’s Your Approach with Using Credit Cards?

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Plastic money is a popular and convenient way to pay for purchases. Credits cards and debits cards are often referred to as plastic money. Most people prefer them as they make transactions more convenient.

So whether you are purchasing a ticket to travel, shopping for groceries and everyday essentials, buying gadgets, clothing or other luxury treats, paying via a credit card is typically the first choice for most consumers. You can also order food, make purchases online, and book different transport needs effortlessly by using your preferred plastic card, thereby saving you a lot of time and energy.

If you are careful with your transactions, the use of a credit card makes your life hassle-free. However, if you make impulsive purchases beyond your means, using plastic money irresponsibly can put you into a vicious debt cycle.

So, what’s your style of using your credit card?

Do you use a credit card only for convenience? This means you never pay interest on the card and instead prefer to pay all dues on time. If that’s your approach, then the industry sees you as a “transactor” – a person who uses credit cards to make transactions easier and does not really utilize the “credit” facility offered by the card fully. Transactors enjoy benefits by accumulating points, miles and other rewards on their card transactions and hence effectively enjoy a “discount” on their purchases.

On the other side of the spectrum, many people use credit cards to make purchases without having enough funds to pay for them in full by the due date. Such users are known in industry parlance as “revolvers” as they “revolve” their balance outstanding across multiple billing statements.  “Revolvers” use credit cards to furnish today’s needs via tomorrow’s income. However, revolving your credit card balance can cost a lot of money in the form of interest, and this type of spending habits can severely strain your personal finances.

When does a revolving habit become risky for your financial life?

Banks typically give consumers a grace period of 21 to 30 days – the period between the end of the billing cycle and the payment due date. When you pay the outstanding amount in full before the due date, you won’t have to pay any interest.

For those who struggle to find the funds to clear their credit card balance each month, it’s easy to enter into a vicious cycle of debt.

When the payment is made after the due date, i.e. when you  “revolve” a balance, interest is calculated on an average daily balance method from the date you made the purchase.

If you continue to revolve a balance, there will be no grace period. You accrue daily interest on your balance outstanding and new purchases. So, your statement will then show substantial interest each month. In such a scenario, everything you purchase automatically becomes 30-40 per cent more expensive (depending on your particular card’s interest rate). This is a lousy buying strategy.

Moreover, for Personal loan seekers, this revolving balance can act as a disadvantage. It impacts your debt-to-income ratio (DTI) adversely, which in turn affects the credit score.

Revolvers that tend to accrue interest daily will have higher utilization rates and DTI ratios. The utilization rate and the percentage of the available credit you’re using are vital elements in determining a credit score.

For example, if your statement balance says Dh1,000, your credit report will indicate that you have a debt of Dh 1,000 that month. Now, if your credit card has a Dh1,000 credit limit, then the utilization rate here will be 100 per cent, even when you pay the bill in full.

So, here, to lower your utilization rate, you need to limit your purchases for the month or make payments early.

Whether you use the card and make payments as a revolver or transactor is not essential here. What you need to keep in mind is that for a better utilization rate, you must bring the total balance as low as possible and pay the remainder of the bill on time.

A higher DTI results in you paying extra money as extra interest charges in the long run (as these could impact your other loan interest rates in the future). Hence, a low DTI is vital for securing more favourable terms on a new loan or line of credit. It is also recommended you pay off all existing debts before submitting such a loan application.

The revolving habit overall imposes a high risk on your saving strategy and financial health. However, if you are revolving the balance at the time of an emergency, then carrying a balance for several months on a credit card is a better option to other even more expensive financing methods.

Even for other mindful larger purchases made with a credit card that is backed with a good plan to pay off the debt, it can be a wise decision. Remember, credit card companies will always prefer having revolvers because interest charged equals higher income for them. But, if you are looking for a robust financial situation, aim to be a transactor and always pay your credit card balance in full each month.

 

Six Ways Digital Banking Systems Transform People’s Lives

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Technology is changing the way we talk, dress and interact with each other, and it’s also changing the way we manage our money. With smartphones,  tablets, PCs and even smartwatches becoming a vital part of people’s daily lives these days, the desire to use one of these devices to access financial services conveniently has become commonplace.

A recent survey conducted by Oracle found that 60 percent of customers globally want to open a bank account online. Whether by need or by choice, customers want more digital options to access banks and manage their finances.

If you are unfamiliar with the nuances of digital banking, here are some basic pointers. “Digital banking” means digitization of traditional banking activities and services that have so far been available to customers only when they either physically visited a bank or contacted their bank’s customer service department over the phone.

These services usually include:

  • Money deposits and withdrawals
  • Transfer of funds
  • Checking and savings account management
  • Applying for financial products
  • Management of loans
  • Paying bills
So, is digital banking just a passing trend, or is it a  here to stay?

Innovations and technology have been driving the expansion of the banking business across the world over the past two decades.

Higher internet and mobile penetration even in remote corners of the world is helping establish deeper links between people and organizations. The preference for digital banking, therefore, is growing rapidly and is here to stay.

Here is how digital banking adds convenience to people’s lives:

 1. Saves time

Digital banking provides you with the luxury of banking from anywhere in the world and at any time. Online banking systems are available round the clock, with the exception of scheduled maintenance periods of the banks’ websites. These are necessary as banks use a host of technological solutions that require frequent upgrades to make your experience easy and fast.

Through online banking, you can check your account balance and transaction history, print account statements and balances. You can also pay bills, use direct debit services, order cheque books, transfer funds from (and to) your account and so on. All these online services can save you a lot of time and money.

2. Eases money planning

Digital banks have loan calculators, financial planning tools, investment solutions, budgeting apps, etc. to help in proper planning. They also support with tax matters, so customers can plan their finances without having to visit a bank physically.

3. Flexibility with payments

Say goodbye to carrying cash when you go shopping. Now mobile wallets (m-wallets), or virtual wallets are getting to be new trendsetters with more and more people using them. With banks going digital, it also gives you the flexibility of using digital wallets that lets you pay by using your smartphone.

It is a safe and easy way of conducting transactions. Digital wallets are paving the way for a cashless future, enabling customers to pay via mobile phones and thereby eliminating the use of cash.

4. Get real-time information

Digital banks use technology that helps notify you of account activities in real-time. So, you can be informed almost instantly of any activity that takes place in your account –credits, debits, charges, etc.. These messages can help to combat fraud and keep your finances secure.

5. Have a remote advisor

Some digital banks also provide you with a dedicated digital relationship manager for your service, so do not feel alienated due to technology. Your digital manager, even though working remotely, will take care of your banking needs around the clock. There are chatbots and robotic consultants, equipped with AI and online banking tools. However, as customers often like to speak to an actual person, striking an ideal balance is essential.

In many countries, digital banks are a huge help for start-ups and small-to-medium sized companies. They facilitate these organizations to carry out their day-to-day banking requirements through mobile apps, which gives them the flexibility of accessing a variety of services to help manage their business.

6. Provides secure solutions

As banks try and provide more seamless customer experience, there is the risk of fraud where millions of dollars could potentially be siphoned off within the blink of an eye. Customers demand convenience and efficiency, but they also seek state-of-the-art safety and security for their digital transactions.

Going forward, digital banks will need to partner with fintech companies to solve business problems and create new solutions. Such collaborations will help support the development of new products and guarantee a better acquisition of customers. AI and machine learning will be an essential part of the digital banking landscape, and so will comprehensive fraud management and cybersecurity tools.

Digital banks are leading a silent transformation in the banking sector for a more connected generation. As people continue to use a wide range of devices, the expectation of services from financial institutions is based increasingly more on the click of a button while being on the move. Digital banks are indeed ushering in a new era of banking with their ever-connected services

 

Top 4 tips to consider while looking for Personal Loans

Top 4 tips to consider while looking for Personal Loans

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UAE Residents have several options to finance purchases or to meet certain expenses. Savings is probably the best option to start with, but for those who are on tight budgets there are other options such as Credit Cards and Personal loans in Dubai, UAE.  While there are several other options which are mushrooming across the globe for instance, peer to peer lending and alternate finance, the most prominent and favoured one is the Personal loan which has several advantages over the rest. UAE banks offer personal loans up to AED 1 Million based on several qualifying factors.

Personal loans are generally preferred due to the following reasons:

  • Easy to avail – Simple and easy documentation. Most banks don’t even need a bank statement these days as they would be able to verify your salary details from your bank thorugh your IBAN, of course based on your authorization.
  • Short term generally – Payback period can generally be as short as 1 year
  • With or Without Salary transfer
  • No collateral required
  • Clear visibility on interest that one would end up paying for the entire loan availed.
This article primarily focuses on certain key aspects of personal loans that one should be aware of prior to signing on the dotted line-
1. Compare Personal Loans

It is important that one is aware of the various loans available in the market. UAE banks offer personal loans both with and without salary transfer. The ones without salary transfer, loans are offered on higher interest rate than the ones with a salary transfer. To compare loans, best places to refer are the comparison sites which are a one stop place to do research prior to signing up.

Make sure you do the math, refer to the interest rates, fees and processing charges. You can compare personal loans offered by UAE banks here

2. With or Without Salary Transfer?

It is always wise to take a personal loan with a salary transfer as the interest rates are as low as 5%. However, you will have to also check with your HR if they are fine in transferring salary to the bank of your choice. Normally, HR has a tie up with certain banks for processing salaries and the best place to start would be to identify the banks from your HR.

A salary transfer loan would need a letter from your HR in the format as specified by the bank. A personal loan without a salary transfer is recommended as a second loan or when someone is not eligible for a top up loan on their current salary transfer loan. This type of loan does not require a salary transfer letter from your HR but might need just a salary certificate.

3. Credit History dictates your loan interest rate or cost to borrow

Most of the banks in UAE have moved to a credit score / credit history-based interest rate. A high credit score would mean a lower interest rate.

Please refer to the article to learn about credit history and how to maintain a health credit score

4. Other eligibility criteria

Apart from credit bureau, banks also look at:

Work information: Employer, Designation, Years in Work, Fixed and Variable income

Debt Burden: Percentage of liabilities (financial obligations one owes on a monthly basis like Loan EMIs, minimum dues on credit cards etc.,) against total fixed salary.  The general condition is including the new loan EMI debt burden should be less than 50%.

Takeaway

Personal Loans are a convenient and popular method for purchasing products or services. Soulwallet recommends customers to make sure if there is a real need for a loan as any sort of debt must be avoided if possible. Having said that personal loans are also a simple and easy to avail with many banks in UAE moving to digital channels.

As a personal finance aggregator Soulwallet has analysed various personal loan features. For more details visit us on personal loan in UAE page.