Balance transfer in UAE

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Interest Rate

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Reducing Rate

Balance Transfer in UAE

Credit cards have been the go-to financial tools for most people trying to manage their expenses in UAE. Banks and financial institutions have also identified this need and offer various services which can make management and repayment of credit economical and easier. A balance transfer is one such facility.

What is balance transfer?

Balance Transfer [BT] is the facility provided by credit card providers which allow the cardholder to transfer his debt or the money owed on the credit card to another credit card account with a different bank or financial institution. This is a mutually beneficial facility as cardholders get an opportunity to repay their debts at much lower rates and the banks an opportunity to help their customers manage their debts.

Most banks offer an interest-free period in the balance transfer facility to attract cardholders. Some banks also offer an installment option or lower interest rates for a fixed tenure to help you repay your debt with lesser interest.

When should I opt for a balance transfer?

A balance transfer can be used by anybody who can handle credit responsibly. Let’s look at an example:

Scenario: You have a credit card with a credit limit of AED 30000 and have utilized the entire limit. Now, being an example let’s assume that you can afford to pay AED 1500 every month towards repayment of your credit card and the monthly interest rate is 3%. In such a scenario, you will be able to repay your credit card debt in 31 months [AED 46500].

If you choose the balance transfer option, then depending on the bank you might get an interest free period of up to 6 months which would mean that with the same repayment capability you will be able to repay AED 9000 [1500*6] without interest. You can also opt for the installment option wherein the entire amount is divided into equal installments at a much lower interest rate.

The bank offering this service usually offer up to 90% of the new card’s credit limit. So, continuing with our example, if the bank is offering you a credit card with a limit of AED 30000, then you can do a balance transfer of up to AED 27000 from your old account.

As can be seen in this example, the credit card balance transfer option can truly help you manage your debts efficiently. If you are finding yourself go down the spiral of credit card debt, then balance transfer can be a handy tool to get your debt back in control.

Are there any charges involved?

Most banks charge a balance transfer fee which is usually a percentage of the amount transferred. All interest rate benefits offered are only for the balance transfer amount and all new transactions are charged as per the existing rates.

Banks offering Balance Transfer Credit Card in UAE

Most banks offer a balance transfer facility for cardholders in UAE. Here’s a look at few of them:

First Gulf Bank Balance Transfer

First Gulf Bank [FGB] offers a wide array of credit cards in the UAE. The features of the FGB Balance transfer facility are:

  • Outstanding balance can be transferred from any credit card in the UAE to the FGB credit card.
  • Flat rate of 0.69% per month or a reducing balance rate of up to 1.26% per month.
  • You can choose an installment tenure of 6, 9, 12, 18 or 24 months.
  • Processing fees may apply.

Emirates NBD Balance Transfer

Emirates NBD offers credit cards with an array of benefits and privileges to cardholders in UAE. The features of the Emirates NBD balance transfer facility are:

  • A minimum amount of AED 3000 is needed to apply for a balance transfer.
  • A balance transfer is offered at 0% interest rate for 6 or 12-month tenures during which minimum 5% of the balance transfer amount is required to be paid.
  • After the end of the interest-free period, normal monthly rates apply.

RAKBANK Balance Transfer

RAKBANK offers credit cards with no annual fee ever and up to 3% cashback on domestic and international transactions. The features of Rak Bank balance transfer facility are:

  • No interest to be paid for the first 3 months on the balance transfer amount.
  • Processing fee is 1.95%.
  • After the interest free period, the monthly interest rate is 2%.

Mashreq Bank Balance Transfer

Mashreq bank offers its cardholders amazing domestic and international benefits. The features of Mashreq Bank balance transfer are:

  • Fixed monthly installments to be paid on the balance transfer amount.
  • Maximum tenure of 36 months.
  • Monthly interest rate starting from 1%.
  • Balance Transfer cancellation fee is AED 100.

Abu Dhabi Islamic Bank Balance Transfer

ADIB offers Shariah compliant credit cards to customers with a plethora of benefits. The features of ADIB balance transfer are:

Two offers to choose from:

No profit rates for 12 months
  • You can use up to 50% of your cover limit
  • A processing fee of 3% is charged on the balance transfer amount subject to a minimum of AED 200. This is a one-time fee. The contractual Murabaḥa profit amount applies after 12 months.
  • Minimum balance transfer amount is AED 1000.
  • The balance transfer amount will not be eligible for any rewards like cash back or air miles.
No profit rates for 3 months
  • You can use up to 100% of your cover limit
  • A processing fee of 2% is charged on the balance transfer amount subject to a minimum of AED 200. This is a one-time fee. The contractual Murabaḥa profit amount applies after 3 months.
  • Minimum balance transfer amount is AED 1000.
  • The balance transfer amount will not be eligible for any rewards like cash back or air miles.

Points to remember:

  • Research well and commit to a balance transfer offer only when you are sure that it will help you lighten your debt burden.
  • Usually, post the offer period expiry date, the regular rates apply; understand them well.
  • A balance transfer is designed to help you come out of the debt cycle. Don’t go swipe happy unless the balance transfer amount is cleared.
  • Ensure that you don’t miss your installments and attract undue fees.
  • Make the most out of the interest-free period. Strategize and plan your finances before availing a balance transfer facility.

FAQs

Q. Is a balance transfer possible immediately after the end of the interest-free period?

A. Technically, yes you can. However, with the launch of Al Etihad Credit Bureau, your credit behavior will be tracked and it can cause problems to receive credit in the long run since the pattern would be recognized over time.

Q. Is a balance transfer possible from internationally issued credit card accounts?

A. No.The facility of a balance transfer is available only for credit cards issued in the UAE.

Q. Why did my balance transfer request get rejected?

A. Banks hold the rights to approve or reject a balance transfer request. A bad credit rating is a primary reason for rejection. You must try to keep a good credit record to be able to avail this facility.