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28 March 2024

Shoppers become more credit card savvy

People are no longer rushing to get credit cards because they offer benefits like air miles. (AP)

Published
By Sunil Kumar Singh

UAE shoppers are becoming financially savvier not only in terms of how they spend but also in terms of what they look for in credit cards.

In an apparent detour from the past behaviour, when it comes to choosing a credit card residents in the UAE are giving more weight to convenience and monetary security than getting swayed just by a host of rewards or privileges that come along with credit cards, bank officials have said.
 
“People are not rushing to get a credit card just because it is offering maximum benefits such as cash back or air-miles, etc, as was the case earlier. If we look at the break up of credit card users, approximately 60 per cent of cardholders belong to that segment which consists of people seeking credit and the ease of getting money,” said Navneet Dave, Head of Cards, NBAD.
 
“They're happy to get credit and convenience and other incentives being offered by cards hardly matter to them.”
 
Another 20 per cent of users are status-conscious and consists of those who're seeking status and privileges that come associated with premium cards such as platinum, world or infinite cards.
 
The third and the final set of people, comprising the remaining 20 per cent, are those who seek rewards in credit cards.
 
These reward addicts look for cards that give them the maximum benefits that could in the form of air-miles, loyalty points or cash back. To them what matters most is the rewards and loyalty schemes of the card, he said.
 
Banking experts believe that although the UAE remains a predominantly cash-driven society, there’s a growing awareness among people to judiciously use their credit cards.
 
“There is a shift towards the use of plastic as the consumer becomes more aware and educated and sees the real benefits and advantage of using the credit and debit cards,” said Mustafa Ramzi, Head of UAE Cards, HSBC.
 
“While people are still opting for credit cards they're also becoming increasingly prudent by realising that it's not good to have too many cards. Further, they're also better managing their credit card usage and spend patters,” said Dave.
 
He said people willing to get a credit card are trying to get it from the primary banks, i.e. bank where their salary account is, and perhaps another card from a bank that gives the best rewards.
 
According to R Sivaram, Senior Vice President - Head of Cards, Retail Cards Business, Emirates NBD, each bank needs to have differentiators for consumers to choose credit cards that fit all their needs, as there are a number of influencing factors that affect a customer’s decision while choosing a card, including credit limit, acquisition offers on the card, pricing, benefits and features and rewards for card members.
 
“In our research, customers indicated that they wanted not only good value from a cards loyalty programme but also desired flexibility and choice. They also indicated that they would prefer not to be limited to only one option when it comes to rewards. They desired the flexibility to choose the rewards themselves, in the form of gift vouchers or frequent flyer miles or cash back, as per their specific need at that point in time,” he said.
 
Banking and financial experts say credit card usage is declining in the UAE and it’s being taken over by more secure e-payment solutions like debit cards and pre-paid cards.