Dubai – MENA Herald: 73 percent of UAE residents surveyed by compareit4me group admitted to having some kind of debt with UAE banks, with credit cards topping the list at 57.2 percent, followed by personal loans at 45.3 percent. But with the holiday season fast approaching and spending on plastic in the UAE expected to increase again, these figures could be set to rise.
Research by Euromonitor International found a steady rise in spending last December of between 5-10 percent, compared to the previous month. Meanwhile, a further survey carried out by YouGov and Kippreport found that 95 percent of UAE residents are planning to shop for gifts for the holiday season, indicating that a similar hike in spending is highly likely, which could perhaps lead to further personal debt.
The survey conducted by compareit4me.com, the Middle East’s leading finance comparison website, also revealed that 45 percent of those surveyed found their financial situation, along with the management of their debt, to be highly stressful. 15.8 percent even stated they had made late payments or missed them completely once or more over the last year. Since the introduction of the Al Etihad Credit Bureau late last year, all missed payments are recorded and provided to banks, meaning any future loan applications these individuals make could be severely hindered.
However, the cost of living in the UAE is continuing to increase, with prices nationwide rising annually by 4.4 percent from July 2014 – July 2015, up from 4.2 percent from the previous year. Additionally, bank executives have revealed the UAE has one of the world’s highest rates of indebtedness, at US$95,000 per household.
With this figure in mind, it’s little wonder the number of loans taken out by UAE residents in the first quarter of 2015 increased by 6.5 percent from the same time period in 2014, and according to National Bank of Abu Dhabi, consumers took out a total of AED 1.3 trillion in personal loans from March 2014 – March 2015.
The survey conducted by compareit4me also found 42.6 percent of respondents have taken out personal loans. Thus reflecting further just how great the need is for consumers to gain quick access to large sums of money to deal with the burden of rising costs of living in a region where you have to fund starting a new life away from your home country, and keeping up with an often fast paced, high flying life at that.
UAE banks are, however, continuing to offer more and more support to help reduce debt. Adding to their portfolio of products to provide more consolidation options.
Banks including, Emirates NBD, NBAD, ADIB and Mashreq offer consumers the chance to consolidate their debt into one loan – meaning they make only one manageable monthly payment, as opposed to numerous. Mashreq, for example, are among those offering zero percent interest for the first three months if a customer transfers an outstanding balance from other bank cards.
Jon Richards, CEO compareit4me.com, said: “Public holidays always see an increase in spending…this highlights the importance of debt consolidation as an alternative to struggling with multiple monthly payments.”
With an increasing amount of UAE banks offering competitive rates on consolidation loans and credit cards, the amount of residents struggling to deal with debt could drastically decrease.