Tag: compare credit cards

balance transfer

5 Things You Must Know About Balance Transfers on Credit Cards

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Balance transfer helps the credit card holder to pay off the balance amount on an existing card by transferring it to another card. A customer is usually drawn towards credit card balance transfers to avail lower promotional rates of interest and additional benefits like rewards programs, points, etc .. Most credit card companies aim to entice cardholders by waiving the balance transfer fee. They might even offer an introductory period of 6-18 months, during which no interest would be charged on the sum transferred.

Scrutiny of these offers is imperative to benefit. By being attentive you can gain a significant advantage while avoiding high interest rates during debt payment.

1. Zero interest card vs. balance transfer fee

When you are executing a balance transfer, you’re required to pay an interest of 3 to 5% of the total transferred amount, called the balance transfer fee. Although this can add up to a hefty amount on top of your balance, it might still be less than a card with high interest rate. It is important to calculate how much you are saving with a zero-interest credit card, compared to your current monthly interest rate. Choose what’s best for you- a card with 0% interest for an introductory period with an applicable balance transfer fee, or one without the zero-interest feature but no balance transfer fee.

2. Your credit score might get hit

If you’re planning to apply for a new credit card, be ready to brace your credit score from taking a hard hit. Whether your application is approved for the card or not, your credit score could decline after the enquiry. Canceling your original credit card upon making the balance transfer could result in your average account age to drop, as well as cause your total available credit to dwindle. So, beware of these factors impacting your credit score negatively. A simple way out of this mess is not to close the original card but to continue it with zero balance. Nonetheless, if you’re easily tempted to use the original card, then it’s best to close it.

3. The offer is temporary

It is important to remember that the zero-interest offer is only temporary for 6-18 months, and the Annual Percentage Rate (APR) will escalate once the introductory period gets over. Don’t let the low APRs tempt you, try to pay off your balance within this period itself. Make sure that you don’t miss the opportunity to pay off your debt while it is still low, and not start to accumulate high interests on your balance again.

4. Scrutinize the terms of your card

Your application has to be approved to avail a 0% promotional rate of interest. Also if the credit limit on your 0% balance transfer credit card is so low that it doesn’t even cover the amount you require, there’s no way the card can help you (even after you’re approved for one). You’ll simply have to pay two amounts instead of one, every month. Hence, remember to scrutinize the terms of what you’re getting yourself into. As promotional APR offers can exclude balance transfers, check whether the 0% interest is applicable on balance transfers and/or purchases, as a lot of companies offer it for either one.

5. Avoid making new purchases

If you’re an impulsive shopper, it is advisable to steer clear of getting a new credit card. If you keep adding debt to the original balance transferred via another credit card, it’s bound to put you in a worse position than where you started. More often than not, the 0% interest isn’t valid for new purchases, which means you’ll end up accumulating new interest immediately upon making that new purchase. Therefore, it’s best if you don’t start making new payments with your balance transfer credit card.

Your focus should be on strategically decreasing your debt through your balance transfer credit card. Make sure to enquire about each & every term singularly: starting from the expiration date of the 0% APR, to the interest rate after the introductory period, applicable balance transfer fee, and least monthly payment.

 

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.

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

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

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

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

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

Components of a Credit Report

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

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

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

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

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

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

What is a credit score and why is it important?

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

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

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

Below are some simple disciplined practices one needs to follow:

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

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

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

How and where can I get my credit report?

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

Takeaway

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

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

possible reasons why your credit card application has been rejected

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

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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 Maximize Your Credit Card Rewards Earnings?

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Today’s consumers are inundated with a wide array of options for rewards credit cards. While this (almost) guarantees that you can find the perfect one for you, it also requires some research on your part to ensure that you are applying for a good fit.

One of the most significant reasons why people use credit cards is because of the potential rewards that they can earn. Most of the time, these rewards can be obtained through the same day-to-day purchases that you would already be making.

Read on to learn how you can maximize your credit card rewards earnings.

1. Compare credit cards

Before you decide on a credit card, make sure to utilize a credit card comparison site to ensure that you are selecting the right one for your needs and lifestyle. Different credit cards are created for different people, so if you want to maximize your credit card rewards earnings, it is essential that you find a card that is suited for you. If you are a frequent traveler, then you probably want to find a credit card that offers cash back or travel rewards as these are features that you will most likely be able to maximize.

When you utilize a credit card comparison site, you will be able to instantly discern the similarities and differences between the features and benefits of potential credit cards for which you qualify. For example, in the UAE, credit cards have a range of monthly salary requirements from AED 5,000 to premium  cards that necessitate a higher salary range.

2. Avoid high credit card fees

In order to maximize your credit card rewards earnings, you want to make sure you are avoiding high credit card fees. To do this, you need to make sure that you are prepared to use your credit card responsibly and pay off the bill each month – in full. If you pay your bill in full, on time, then you can avoid having to pay interest on each billing cycle.

If you are unable to pay off the bill in full one month, you still need to pay more than the minimum recommended amount. Otherwise, the credit card interest rates are going to increase significantly, and you are going to have to pay a lot more for your purchases. Keep in mind that late or missing payments can incur extra fees, such as penalties and late fees.

Also, take into account any annual fees, interest rates, balance transfer fees, and potential charges. All of these add up and need to be financed if you are going to receive any of the potential credit card rewards.

3. Consider flexible cards

Generally, travel and entertainment rewards cards are some of the most popular options (for obvious reasons). However, for some people, these cards can actually limit how rewards can be earned. What’s more, many of these credit cards place a cap on the number of rewards that you can collect. Therefore, it is highly recommended that you consider a flexible credit card.

Look for a credit card that permits you to earn cashback across a variety of categories that align with your purchasing habits. For example, the Citibank Cashback credit card includes all categories for earning cashback and offers excellent cashback on international purchases. Plus, unlike many other cards, this one has unlimited and automatic cashback. Other benefits include global airport lounge access, dining privileges and exclusive offers, travel inconvenience insurance, and supplementary cards.

4. Utilize digital tools

In this day and age, more and more banks offer digital tools that can significantly help you track your financial rewards, deals, and benefits. By opting for a credit card from a bank that provides online dashboards, you can efficiently see ways to maximize your rewards and the options for redeeming them. If you opt for a cash rewards card that has digital tools, then you can determine where you want to use your rewards.

What is more, if you are part of multiple rewards programs, then utilizing these digital tools can help you stay on top of it all. These digital tools grant you greater control over your finances. For example, you could choose an automatic redemption feature to make recurring contributions into your savings and investment accounts. This strategy helps you turn everyday spending into long-term financial success.

Final Thoughts

As there are so many credit cards available on the market, you must choose one that not only has the best offer, but also maximizes your credit card rewards earnings.

At SoulWallet, we pride ourselves in helping you find the best credit card for you. All that we require from you is that you tell us what you want, and then we will give you the options that you need. Together we make finding the right credit card easier, more convenient, and more rewarding.