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Credit cards need not be just fair weather friends!

Posted on May 7, 2020October 23, 2020 by admin

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.

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

Posted on April 22, 2020September 13, 2020 by admin

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.

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

Posted on April 2, 2020November 10, 2020 by admin

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.