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Hi Dubai
21-05-2025
- Business
- Hi Dubai
UAE Banks Raise Minimum Balance Requirement as Fee Exemptions Tighten
Several UAE banks will raise their minimum balance requirement to Dh5,000 starting June 1, tightening fee exemptions for customers who do not hold a credit card or personal financing. The move, up from the longstanding Dh3,000 threshold, means many account holders may now face a monthly fee of Dh25. According to a report by Emarat Al Youm , one bank has already rolled out the updated policy. The change is aimed at encouraging customers to either maintain higher balances or sign up for banking products such as credit cards or loans. Customers who do not meet the new balance requirement and lack qualifying financial products will incur the Dh25 monthly fee. Banks justify the shift as necessary for liquidity and operational cost management. Vijay Valecha, chief investment officer at Century Financial, said higher minimums help banks increase deposits, enhance loan offerings, and offset rising service costs. However, finance expert Dr Ben Lebig raised concerns over the burden this places on low-income residents, particularly those in the service sector. 'For workers whose salaries barely cover expenses and remittances, this rule may be impossible to fulfill,' he said. He urged banks to introduce tiered requirements based on income levels. Fee waivers will apply to customers with a total balance of Dh20,000 or more, or those transferring a salary of Dh15,000 or higher. Partial exemptions are also available for those earning between Dh5,000 and Dh14,999, provided they hold additional financial products. To ease the impact, experts suggest alternatives such as payroll cards, corporate accounts for low-wage employees, and zero-balance digital accounts. These options, commonly used in the Wage Protection System, can help workers stay compliant without added financial strain. News Source: Khaleej Times
Hi Dubai
13-03-2025
- Business
- Hi Dubai
Buy-Now-Pay-Later Apps: Convenience or Financial Trap?
The rise of buy-now-pay-later (BNPL) apps has revolutionized consumer spending, allowing individuals to make purchases and pay in instalments . While these apps offer convenience, experts warn that they could encourage impulsive buying and financial mismanagement. Many banks now offer BNPL plans, which allow consumers to make purchases and spread the cost over a fixed period without incurring interest charges, provided they adhere to the repayment schedule. Dr. Ben Lebig, Value Chain Mid-Term Strategist at Chevron, commented on this growing trend, noting that while the intent was to make high-value purchases more affordable, the rise of these apps has led to unintended consequences. "The use of these apps has evolved into something else," he said, highlighting the tendency for impulsive buying due to the delayed financial impact. Dr. Lebig cautioned that excessive reliance on BNPL apps could lead to a cycle of debt. "These apps create a false impression that everything is affordable, resulting in impulse buying and spending beyond one's means," he warned. He advised consumers to track their spending closely and compare it with their monthly income to avoid falling into financial strain. Users in the UAE have shared varied experiences. Abdullah Karama Al Zubaidi from Abu Dhabi views these services as a "double-edged sword," recognizing their potential for both helping with essential purchases and encouraging unnecessary luxuries. Conversely, Ahmed Salem, also from Abu Dhabi, praised the flexibility of BNPL apps but raised concerns about their alignment with Islamic financial principles. Dubai resident Heba revealed her personal struggle with accumulating debt, stating she eventually closed her BNPL account after being overwhelmed by instalment payments. Afaf Haddad from Abu Dhabi expressed similar concerns, labeling the services as a "trap" that encourages easy spending. As BNPL apps gain traction, consumers must strike a balance between enjoying their convenience and maintaining responsible financial habits to avoid overspending. News Source: Khaleej Times
Khaleej Times
13-03-2025
- Business
- Khaleej Times
UAE: Do buy-now-pay-later apps encourage higher spending? Expert explains
In recent years, the rise of buy-now-pay-later apps has transformed the way consumers approach shopping, enabling them to make purchases and pay in installments. However, this convenience has sparked a debate among experts about whether these services encourage higher spending and the potential implications for consumers' financial habits. Many banks also provide the option to pay in interest-free installments, often referred to as "buy now, pay later" (BNPL) plans allowing customers to make purchases and spread the cost over a set period without incurring interest charges, provided they adhere to the repayment schedule. Dr Ben Lebig, Value Chain Mid Term Strategist - Chevron, weighed in on this growing trend. "The 'buy now pay later' apps have become widely used in the UAE among various communities,' he said. "While the intent has been to make high value purchases become more affordable by spreading the payments across various months, the use of these apps has evolved into something else.' Dr Ben also mentioned that these apps have promoted impulsive buying because the impact is not immediately felt. He has witnessed many who in the past would not buy something they think they could not afford, but because of the installment payment using these apps, are now more inclined to splurge. However, he warned that continue relaying on these apps could result to accumulation of debt that builds up over time. 'These apps create a false impression that everything is affordable hence creating a habit of impulse buying and the danger of spending beyond their means." Dr Ben explained. "Consumers should always be conscious of their use of these apps through detailed tracking of spending while comparing it with their monthly income.' Mixed experiences Users across the UAE have shared mixed experiences with these services. Abdullah Karama Al Zubaidi from Abu Dhabi thinks that these apps are double-edged swords. 'They can facilitate essential purchases, but they can also lead to a bad habit of buying unnecessary luxuries," Al Zubaidi said. Ahmed Salem, also from Abu Dhabi, noted the benefits of BNPL apps, saying, "The programme is excellent and helps a lot with purchases, especially if a person cannot afford to pay the full amount at once,' said Salem. However, he sought Islamic guidance on the use of these apps. Heba, a resident of Dubai, expressed her concerns, stating, "I closed it because debts accumulated. One tends to purchase without awareness, and by the time the pay cheque arrives, most of it goes to its installments in the first week." Afaf Haddad from Abu Dhabi echoed similar sentiments, saying, "These programmes facilitate the installment process for consumers, but I consider them a trick that makes people take the easy route of installment buying for more expensive items. In the end, most of the salary goes towards these." As the popularity of buy-now-pay-later apps continues to grow, it remains essential for consumers to strike a balance between convenience and responsible financial management. Ultimately, understanding the implications of these services can empower individuals to make informed purchasing decisions and avoid falling into the trap of excessive spending.
