Some UAE residents own eight credit cards, survey finds

Experts warn of the perils of having credit card debt as survey reveals some residents own as many as eight.

In this series:

■ 75 per cent fail to save enough for retirement

■ Survey finds many UAE residents failing to save for retirement

■ Survey finds 94 per cent of UAE residents have financial worries

■ Experts say people must resist urge to splurge

■ Rent is UAE residents' biggest expense, survey finds

■ UAE residents long for financial security

■ Start saving from early age

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ABU DHABI // Most survey respondents carry at least one credit card, while some admit to as many as eight.

Tim Denton, a financial adviser at Dubai company Abacus, urges people not to depend on credit.

“Where possible avoid borrowing, as the short-term benefit leads to even more financial pressure as you try to repay the loan plus interest,” Mr Denton says.

“Talk to an adviser and look at the best way to balance your current situation, as well as starting to make plans for your future needs.”

About 20 per cent of respondents who are employed declare they have applied for credit cards to cover large expenses.

The study found 72 per cent have at least one credit card in the UAE, while 28 per cent have a credit card in their home country.

And 37 per cent said they have more than one card.

Nigel Sillitoe, of Insight Discovery, says residents with a credit card should compare the interest rate being charged against other banks.

“Luckily, a number of product comparison websites now exist,” Mr Sillitoe says. “Focus on the annual percentage rate and don’t be lured in to marketing gimmicks such as cashback offers.”

Accommodation expenses are the most common large expenditures that prompt the application for a card, the poll found.

Credit cards carry very high interest rates and should not be used for rent payments, says financial expert Chris Ferguson.

“Credit cards are good for spending and receiving airline miles or other rewards but should not be used as long-term cash-flow management,” he says. “If they are used like this the interest payments will be a massive expense.”

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About this series:

A study into the saving habits of Emiratis and expatriates found a quarter of all employed residents do not save any of their monthly wage. And 69 per cent have not started planning for retirement. The survey found that only 6 per cent of respondents do not have any financial worries. The majority of people’s wages are spent on rent, followed by groceries and household items leaving some residents dependent on multiple credit cards and longing for financial security. Financial experts advise residents to resist overspending to avoid a struggle when faced with unexpected expenses.

Coverage from March 9th:

■ Majority of expats in UAE sending money abroad, survey finds

■ High cost of living forces half of expats to consider leaving UAE

Coverage from March 10th:

■ UAE workforce is largely satisfied in their jobs

■ Emergency cash reserves needed in case of redundancy, says financial advisor

■ Most UAE employees unhappy with frequency of pay rises, survey shows

■ Many UAE workers fearful over losing their jobs