UAE sees steep rise in credit card applications

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The number of people applying for credit cards in the UAE soared by 65 percent year-on-year in the first quarter of 2017, new research shows.

Data from consumer website compareit4me.com also shows that residents applied for multiple products to get approvals – they made an average of 3.25 card applications each in the first three months of the year, compared to an average of 2.07 applications each during the first quarter of 2016.

This marked a huge overall increase in the number of credit card applications during the period – at 102.4 percent, according to the research.

Jonathan Rawling, CFO of compareit4me.com, said: “This suggests that, as we saw with personal loans towards the end of 2016, those seeking credit in the UAE may be having to work harder and shop around more to secure it.

“As we said in our 2016 report on personal loans, the liquidity crunch caused by the low oil price has affected regional banks’ appetite for giving out credit.

“Couple this with the widespread adoption of credit reports from Al Etihad Credit Bureau in the UAE, and you have an environment that sees only the most credit-worthy individuals approved for their first-choice financial products.”

The report added that UAE residents appear to have “adjusted their expectations in line with these new realities”. The most applied-for credit card in the first quarter of 2017 was a relatively low-end product with no annual fee and a minimum salary requirement of just AED5,000 ($1,361) per month.

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During the same period last year, the most applied-for card was a premium offering with a minimum salary requirement of AED20,000 ($5,444) per month, (the Citibank Citi Simplicity Credit Card), the report said.

Still, two premium products managed to retain top three spots on the most-applied for list in the first quarter of 2017 (the American Express Platinum Credit Card and Standard Chartered Visa Infinite Credit Card), compared to just one premium card in the same period last year.

Both of these cards have relatively high minimum salary requirements and annual fees, but both come with plenty of rewards for travel, leisure and dining, the report noted.

“This would suggest that, although many residents have set their sights lower in the hopes of simply gaining an approval for their credit card, many others are beginning to see the benefits of higher-end cards – if they have the high salary required to get one,” said Rawling.

“This makes sense in an environment being driven by banks being selective on who they lend to. As a result, we expect applications for higher-end cards to continue growing, as more credit-worthy individuals seek to take advantage of their buying power.

“Meanwhile, we expect more basic cards to continue growing, too, as UAE residents hungry for credit take on the cards that they’re eligible for.”

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