Balance transfers can lighten the burden of UAE debt

I have an outstanding credit card balance I am struggling to pay off. I’ve heard about balance transfer deals where you sign up for a new credit card and transfer a balance from another card at 0 per cent interest for a set period of time. Which cards would you recommend? KL, Dubai

Expert one

Preeti Bhambri, managing director at

Many UAE banks offer balance transfers on credit cards. Some notable options include:

• RAKBank’s Visa card offers balance transfers with a 0 per cent processing fee and 1.5 per cent monthly interest rate on outstanding bal­ances. With most credit cards carrying an interest rate of between 2.4 and 2.99 per cent per month, this is a low-interest card. Plus there is no annual fee.

• CBD credit cards offer balance transfers with a 1 per cent processing fee. Zero finance charges apply for the first six months and there is no annual fee for the card. Post-balance transfer period, the cards have a low interest rate of 1.5 per cent.

• Mashreq credit cards offer balance transfers with a 4 per cent processing fee, but zero finance charges apply for the first six months.

It is important to understand the procedures and the fees:

How do I apply?

You can make a balance transfer request when you apply for the credit card you wish to transfer the balance to, or once the card is in hand.

How much can I transfer?

It depends on the new credit card’s limit, the available balance and the bank’s policy. Some banks allow 90 per cent of a card’s available balance to be used up by a transfer. For example, if a cus­tomer has an unused limit of Dh50,000, he can transfer up to Dh45,000 from another credit card.

What do I pay during the balance transfer period?

You still need to pay the minimum 5 per cent outstanding every month. Pay off as much of the amount as possible during this period to benefit from the 0 per cent interest allowance.

What is the processing fee?

This is a one-time fee charged on the amount transferred. For example, if you transfer Dh50,000 with a 1 per cent processing fee, you will pay Dh500.

What do I watch out for?

Avoid using this card for additional purchases as that would attract more interest. And be sure to close the old card to avoid getting into more debt.

Expert two

Ambareen Musa, founder of

Many UAE residents find themselves caught in a spiralling debt cycle, given the high interest and profit rates on credit cards in the country.

Assuming you have an outstanding credit card balance of Dh20,000 and can only afford to pay off Dh2,000 each month, you will take almost 13 months to pay it all off, which includes more than Dh4,000 in interest payments alone. This is based on an average monthly interest rate of almost 3 per cent.

Given this scenario, many banks in the country offer a 0 per cent balance transfer option for a limited tenure to attract consumers.

This interest-free period usually ranges from three to six months, with many banks also offering a lower interest rate for fixed repayment tenures, in which you can pay your transferred outstanding debt in equal monthly instalments over the tenure, which could go up to 36 months.

The idea behind transferring your existing credit card balance to another credit card offering lower or 0 per cent interest on the transferred amount is to save on interest costs. However, when considering a balance transfer, be aware that banks also levy a balance transfer processing fee. This could either be in the form of a fixed percentage of the total transferred amount, usually subject to a minimum payment, or a fee that varies based on the amount transferred. The processing fee usually ranges from 2 to 3 per cent of the balance transferred.

Remember, balance transfer offers are subject to the sole discretion of the bank, so if you’ve missed any monthly payments in the past, you might not qualify.

Next Money Clinic

I have recently moved from India to Dubai for long-term work in a company. I would like to start investing a small amount from my salary for my future. I can only contribute Dh2,000 to Dh3,000 per month. What suitable options are available? SS, Dubai

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