Know your rights in Dubai: Money

Where you stand in Dubai with car loans, closing accounts and more

Area Guides, Living in Dubai

Credit cards
Credit cards are notoriously the most expensive way to borrow money. Despite this fact, a survey late last summer by UAE financial comparison site www.compareit4me.com found that 77.3 percent of respondents owned credit cards, with a quarter owning more than three. More worryingly still, 28 percent of respondents reported they were struggling with debt repayments across the board. Paul Callaghan, wealth consultant at Professional Investment Consultants Middle East, offers advice on managing credit cards. ‘I would always encourage taking out a credit card, especially in the UAE, as it is the safest way of making many transactions as there is no real direct debit use. It allows consumers to benefit from Visa protection in the form of charge back. But, I would also recommend customers pay off the credit card in full if they can in order to limit or nullify the amount of interest charged.’

Car loans
When it comes to buying a car, most finance houses offer different loan repayment periods, usually between three or five years. Though your monthly instalments may be higher for a short-term loan, whatever gets you through your loan agreement fastest is usually your best bet in the long run. You might get very affordable monthly repayment rates over a five-year term, but this is where the dealers or lenders tend to make the biggest profit. Keren Bobker at Holborn Assets LLC says, ‘You should always do your research and shop around to see what different banks and finance houses are offering. Get information from the retailer, but compare it to what you are being offered by the banks. Although it’s dull, read the small print and ask about early repayment terms, as some plans have penalties. Get the answers in writing, too. If you have the cash it is usually best to repay a loan as early as possible to save paying interest, but only if there isn’t a substantial penalty for doing so.’

Long-term savings plans
‘Inflation is higher here than in most western countries,’ says Paul Callaghan. ‘That means the cost of living is going up year on year at a higher rate than elsewhere in the world. The average interest on your savings is less than one percent and inflation is currently running at around three percent, so in real terms, you are losing money on your savings. A popular way for expatriates and international workers to save is through a regular offshore savings plan, which stops you from falling into that trap and helps protect the value of your money. The main reason why they are so appealing is because they offer compound interest, which means savers earn interest on top of interest each year. It is possible to tailor a savings plan for your particular requirements, ensuring the plan offers you great value for money, taking into account the plan’s features terms and charges. Offshore plans are often viewed as a medium- to long-term solution and generally the first 18 months’ premiums are locked in until maturity. However, for giving up a little bit of access, you get access to funds which can provide you with ten percent growth, and most institutions also will give a saver a bonus payment. I would recommend you seek the advice of a professional investment consultant who can ensure that you meet your financial objectives.’

Benefits of keeping money overseas
For many expats with families and children, Dubai’s financial protocols can be an area of concern. One of the major benefits of keeping a lump sum in an accessible offshore account is that it allows your family or dependents to access money in the event of something happening to you. Accessing current bank accounts in the event of the holder’s death can be a lengthy legal procedure, and an offshore account presents a good safety net in case of such an emergency.

Closing accounts when leaving the UAE
‘If you close a bank or credit card account, make sure you get written confirmation from the bank,’ says Keren Bobker. ‘They will issue a letter upon request. I have dealt with a number of cases where people had thought they had closed an account and found out a few years later that they were still being charged account fees and interest. If the amounts are small the bank is unlikely to take action, but they have the right to register a police case for unpaid debts, which could result in arrest upon re-entering the UAE.’

Cashless payments
Cashless payments are slowly being widely used in Dubai, so with a tap of a card or flash of an app you can pay without fumbling for cash. The RTA is now extending the use of NOL cards to airport taxis and 1,240 city taxis, which are expected to be fully cashless by the middle of this year. Foodie app Zomato has also introduced a cashless system to pay at restaurants around the city. Presently, this service is only available in Dubai. Users with the app on their phone notify participating restaurants that they are paying cashless and the bill is settled with the credit card linked to their account. Private car firm Uber also offers users a
similar service.

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