Residents more hungry for credit cards

Consumers in the UAE are getting increasingly comfortable with using credit cards for their purchases, and, as a result, 2016 witnessed a large increase in the number of people applying for one.
Financial comparison site, compareit4me.com, revealed that the number of credit card applications in the UAE increased by over half from 2015 to 2016. By pooling year-end data from its credit card comparison platform, compareit4me.com recorded that there were 54.75 per cent more applications in 2016 than there were in 2015. The vast majority of these applications were for non-Islamic credit cards, for which applications increased by 134.23 per cent over the course of the year. Islamic credit cards, meanwhile, saw a decrease in the number of applications, with 8.57 per cent fewer people applying for such cards in 2016 than they did in 2015.
Experts believe that the increase in applications and the growing popularity of credit cards stems from users receiving certain perks such as loyalty offers, as well as the ease with which they can be used to make payments.
"There has been a perceptible increase in credit card penetration in the UAE over the past year," said Girish Nanda, general manager of Mastercard UAE. "The demand has been particularly strong for premium and affluent cards targeted at high-end consumers and catering to specific lifestyle needs - such as the Mastercard World and Mastercard World Elite credit cards. This is reflective of the growing trend amongst high net worth individuals in the UAE towards bespoke lifestyle experiences and aspirational benefits, and we expect this trend to gain more momentum in 2017."
Compareit4me.com's data also found that, in terms of features, applications for cards that offered cashback almost doubled during 2016, compared to 2015. Many of these credit cards offer cashback on utility, telecom and school fee payments, suggesting that a large number of consumers want to use their credit cards to save money wherever possible.
"There certainly seems to be an understanding among consumers that, if used appropriately, credit cards can deliver savings on everyday expenses. What's more, the cards that offer cashback on bill payments also tend to come with other benefits. This is a function of banks trying to target financially savvy customers who will be reliable debtors. If you're in that group, you have plenty of choice when it comes to finding a great card," said Samer Chehab, COO at compareit4me.com. Experts have also revealed that the increase in the popularity of credit cards has resulted in many brands increasing their focus on offering secure solutions to further attract customers.
Pankaj Kundra, head of payments at Mashreq, said: "Mashreq has a suite of award-winning credit cards, renowned for offering distinctive and relevant benefits, which are a big draw for any customer interested in applying for a credit card. Additionally, Mashreq has invested significantly in making the payments more secure - transaction alerts, Chip n Pin security, 3D secure authentication, state-of-the-art fraud detection and deflection systems, and tokenisation are measures that instill a huge degree of confidence in our cardholders. With the launch of the Al Etihad Credit Bureau, banks and customers alike have benefited from a more measured approach to credit, which will stand the entire eco-system in good stead for the future."
In terms of salary bands, the group that saw the biggest increase in credit card applications was made up of people earning between Dh20,000 and Dh29,999. Over 240 per cent more people in this band applied for credit cards in 2016 than they did in 2015, suggesting that people in this salary bracket were more confident about taking out credit in 2016 than they were the previous year. "It stands to reason that many people in this salary band were looking to get the most out of their relative wealth with credit cards that offer benefits such as airport lounge access and other lifestyle perks," said Chehab.
"It must be noted, however, that UAE banks in the region have been aggressively targeting customers earning over Dh20,000 per month. So the numbers we've seen could also be a reflection that the banks' targeting strategies paid off in 2016."
Still, credit card applications were up among most salary bands during 2016, as 58.77 per cent more people earning Dh5,000 to Dh9,999 applied for credit cards in 2016 than in 2015. Those earning Dh10,000 to Dh19,999 also showed more interest in credit cards in 2016, with 141.53 per cent more people in that band applying for credit cards than in 2015.
The top credit card provider in 2016 was American Express, which took 22.49 per cent of all applications during the year. Citibank took the second spot with 15.04 per cent of applications in 2016, while ADCB came in third with 13.29 per cent of applications. Union National Bank and Emirates NBD rounded off the top five.
- rohma@khaleejtimes.com