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28 March 2024

Debt before dishonour? 45% of UAE residents admit their EMIs are ‘beyond their means’

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By Staff

A recent survey by compareit4me.com, the UAE-based finance comparison site, has found that the number of people making debt repayments using a credit card is on the increase.

According to survey stats published by the site in a media statement, 20 per cent of those surveyed by the site admitted to making a loan repayment using a credit card, whilst another 45 per cent said their EMIs (equated monthly instalments), or monthly debt repayments, were beyond their means.

This would suggest that almost half of us did not think through about the repayment schedule when piling up loans, which can have considerable repercussions.

Credit is now readily available to those living in the UAE and with weekly calls from banks, many said they couldn’t resist taking out new cards or loans when offered.

A number of survey respondents had fallen into the trap of transferring a balance from one card to another in a bid to save money, only then to fully utilise both credit cards leaving them with double the debt.

The site further said 37 per cent of those surveyed said they had three or more credit cards, and over 50 per cent of those with three cards or more said they had used over 90 per cent of their available credit.

Lastly, 42 per cent of those who answered the survey told compareit4me.com that they only made the minimum payment on their credit card each month.

Only making the minimum payment is a huge issue for those in financial difficulty. Making the minimum payment means you are only paying the interest which means the debt never decreases.

Tom Davies, operations manager at compareit4me.com, said, “The results found in the survey were a big concern. We found worrying trends with large portions of the respondents; trends which meant people were accumulating debt quicker than they could afford.”

Davies continued: “Credit can be and often is a positive thing but only when used responsibly. Anyone considering credit facilities should think carefully about the monthly repayments and the total value of the debt.”

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