Around 71 per cent of affluent residents in the United Arab Emirates owned more than one credit card, a new study conducted by Al Etihad Credit Bureau and Citibank UAE showed.
The study polled 157 UAE residents with a net monthly income of more Dhs 30,000 to gauge their usage of credit and their attitudes towards debit.
Almost 82 per cent of residents surveyed said that they use at least one credit card, indicating that it was the most popular form of credit in the UAE.
Credit cards were also used frequently, with almost a third using their card daily and almost half using it weekly, the report found.
The majority of residents used credit cards to pay bills while 64 per cent of them used it for day-to-day purchases. Another 63 per cent admitted to using credit cards when travelling abroad.
Although the survey was conducted across the UAE, the report noted that residents in Dubai used credit cards to fund a luxury purchase.
Personal loans, consumer lease and bank overdrafts are some of the other popular means of credit among the consumers in the UAE.
The study also highlighted the credit repayment habits of consumers in the UAE.
About two thirds of credit card holders paid off their dues in lump sums while personal loans were paid back in installments. Meanwhile just 12 per cent of respondents used a banking overdraft, opting to repay it in one attempt than in installments, the survey showed.
Extensive usage of credit cards is also one of the reasons on increasing debt levels among the UAE residents, experts say.
Another survey conducted by the UAE-based finance comparison website compareit4me last year showed that an increasing number of residents are using their credit cards or loans to pay off their existing debts. The study highlighted that at least quarter of those polled owned more than three cards, continuing the vicious cycle of debt.
Rising debt among UAE residents and citizens has also prompted the government to adopt a number of measures to address the issue.
In 2012, the UAE launched the Debts Settlement Fund to help out Emiratis settle the debts they incurred during the boom period. Under the initiative, commercial banks are required to waive 50 per cent of debtors’ loans while the other half is settled by the Dhs10 billion-government fund.
Al Etihad Credit Bureau, which was launched last year, is also expected to help stem debts of residents as it provides banks with a comprehensive credit history.