Ramadan 2022: five ways to cash in on UAE bank deals

From insurance deals to credit card offers and car loans, financial institutions across the UAE have rolled out a wide assortment of special deals for residents during Ramadan.

Rising inflation and the knock-on effect of petrol price increases mean that these offers are particularly well-timed.

Inflation in the UAE is expected to increase to 2.2 per cent over the course of 2022, up from 0.6 per cent last year, according to the International Monetary Fund.

Residents are also probably bracing for increased expenses as social restrictions ease and gatherings become popular again. About 47 per cent of respondents in a March poll of 1,010 UAE residents by market research company YouGov said they were more likely to meet their friends and family in person this holy month.

Coronavirus-related regulations prevented home visits and get-togethers over the past two Ramadan seasons, and people have had to rely on virtual catch ups.

For banks and financial institutions, this Ramadan presents an opportunity to bridge a market gap.

“Keeping with the spirit of the holy month, households tend to spend more on food items while entertaining family and friends for iftar or donating to charitable institutions, which can lead to an increase in expenses,” says Suvo Sarkar, senior executive vice president and group head of retail banking and wealth management at Emirates NBD.

The bank has launched a number of promotions this month, including instalment offers for loans on cards and balance conversions, chances for customers to win cashbacks, extra rewards and vouchers, he says.

Abu Dhabi Islamic Bank (ADIB) will postpone one monthly instalment for its personal finance customers at no fees or extra charges to give them “cash flow relief” during what is normally a month associated with higher spending. Customers eligible for the instalment postponement will be contacted by SMS, the bank says, adding the offer is valid from April 15 to May 14.

Sharjah resident Nisreen Arsiwala is one of those people who watches out for bank deals during Ramadan.

“Ramadan is the best time to purchase new items, one reason being banks offer some fantastic deals. I am looking to invest in gold this month and any offers on bank cards will certainly help,” Ms Arsiwala says.

“This is one period where most banks have low or no charges, making it easy to buy new products. If there are some good offers, I may also think about buying a new car,” she adds.

But while bank offers can help reduce costs when it comes to Ramadan and Eid expenses, financial advisers say residents should think carefully about taking on new debt.

“Some banks offer discounts in grocery stores and shopping malls if you use their cards to pay for the purchase. This can help reduce the costs of gifts and entertainment,” says Carol Glynn, a chartered accountant and a Dubai-based finance coach.

The most prudent way to pay for expenses is cash, says Ms Glynn, the founder of Conscious Finance Coaching. However, if the bank is offering a discount on a purchase or a two-for-one offer on a credit card, for example, it can help shoppers to save money, she adds.

The best way to take advantage of bank offers during Ramadan — or at any other time — is to plan ahead and save the amount needed to make the purchase, Ms Glynn says. Then, only purchase items you need or want and have budgeted for and pay down the cost by debit card. If the offer is part of your credit card arrangement, the total balance outstanding on the card should be paid when it comes due.

“It is not advisable to borrow money to purchase gifts or pay for entertainment,” Ms Glynn says. “It is never advisable to use credit cards to make purchases you otherwise cannot afford. Any discounts offered will quickly become redundant if you don’t pay the balance and instead pay interest on your purchase.”

Ms Glynn advises reading the fine print on every offer. Consider, for example, when the offers expire, what the costs of the card are when the offer expires, or whether there are caps on the discounts offered as part of the credit or debit card.

Planning for Ramadan expenses is a year-round exercise and part of a disciplined approach to personal finances.

“After Eid each year, calculate what you spent during the season and start saving for the next year,” Ms Glynn says. “This way, you will have cash to cover the extra expenses and be in a healthy financial position to take advantage of any deals on offer.”

Beyond card and loan products, the smart money is on the bank deals offering investment and savings incentives.

Wealth management and insurance companies also offer Ramadan discounts, particularly to people opening new accounts. That dovetails with consumers’ increased desire to create a financial safety net to protect themselves following health and economic uncertainties, according to Neeraj Gupta, chief executive of insurance comparison website Policybazaar UAE.

“The pandemic has changed consumer behaviour,” Mr Gupta says. “According to a survey conducted by Policybazaar.ae last year, people in the UAE were saving and investing more in financial products than spending.”

Nearly 62 per cent of respondents considered buying individual health insurance with critical illness riders, while 12 per cent were investing in stocks, fixed deposits and other saving schemes or cryptocurrency, the survey found.

Ramadan offers on Policybazaar.ae in previous years typically lead to an increase in sales of between 20 per cent and 25 per cent, Mr Gupta says.

In the UAE, Ramadan finance offers are available in the following categories this year:

1. Credit cards: zero per cent instalments and cashback

Credit cards are among the most profitable businesses for banks and, consequently, there are several promotional seasons throughout the year. During Ramadan, food and community are important themes, so the season is a natural marketing fit for spending-related campaigns linked to iftar and grocery bills.

Abu Dhabi Commercial Bank (ADCB) is offering cardholders discount of up to 25 per cent on iftar buffets at select restaurants in the UAE until the last day of Ramadan, it says on its website.

Similarly, Abu Dhabi Islamic Bank has announced discounts on grocery bills for cardholders this Ramadan, while RAKBank customers can save on cleaning services.

Emirates NBD is offering a zero per cent interest rate instalment payment plan for up to 12 months with partners in key spend categories such as grocery, home improvement and online retail, Mr Sarkar says.

Banks are also looking to attract more credit card accounts this Ramadan. First Abu Dhabi Bank (FAB) is offering customers up to 30 per cent cashback (up to a maximum of Dh300) when they apply for a new credit card in the bank’s mobile app, provided they make the first transaction within 30 days, its website says.

In addition, customers who spend Dh3,000 in the first month will be entered into a draw to win prizes for home renovations, food shopping and more.

Card offers vary from bank to bank, so it’s worth checking your lender's website or app for more information.

2. Car loans: low interest and payment holidays

Ramadan is associated with new cars in the UAE and loan deals could support those looking for an upgrade.

Emirates NBD is introducing offers that include minimal documentation, preferential interest rates and two-minute instant eligibility checks for pre-qualification, Mr Sarkar says.

“The bank has partnered with leading automobile brands across the UAE for lucrative offers, including a first payment holiday of up to 120 days."

Customers using their Emirates NBD credit cards benefit from zero per cent instalments with zero fees for up to 24 months across automobile dealerships in the region.

And for customers looking to change or upgrade their existing vehicle, the bank offers the option of convenient loan settlement supported with instant trade-in with a number of automobile dealerships.

FAB’s website has information on Islamic car finance of up to $1.5 million (Dh5.5m) — or 80 per cent of the car’s value — at annual profit rates beginning at 1.99 per cent for Emiratis and 2.15 per cent for foreigners. The minimum qualifying salary is Dh7,000.

Like all loans, car finance may attract early settlement charges and late fees.

3. Savings accounts: save for a chance to win a Tesla

For consumers looking to build a nest egg, Ramadan-linked incentives on new savings accounts could come in handy.

Emirates Islamic is offering residents who open a Kunooz savings account or increase their balance a chance to win a cash prize — or a new Tesla.

Every Dh5,000 saved gives account holders a chance to win one of three prizes of Dh1m and one of three Teslas, while saving Dh1,000 comes with a chance to win a cash prize of Dh10,000 every two weeks. The offer is valid until April 30, the bank says on its website.

4. Wealth management: account credit for new customers

For those with a little more cash on hand, Ramadan could be the perfect time to shop around for wealth management incentives.

Citigold, the personal advisory and investment planning service from Citibank, is offering new customers in the UAE up to Dh7,500 in account credit up to June 30. To qualify, you will need to fund your account with a minimum of $200,000 and maintain that balance across eligible savings, term deposits and investments for 90 days after the initial funding.

There are additional offers available, such as referral bonuses and cash rewards on opening mutual fund accounts.

5. Insurance: discounts on health and insurance products

With recent events having underscored the uncertainty of life, insurers on Policybazaar.ae are offering deals on health, motor and term insurance valid through to May 5, 2022.

Those buying comprehensive health insurance have access to a free health concierge service from the insurance marketplace’s partner GuideMeDoc, and can book free medical tests to measure indicators such as thyroid function, lipid profile or liver function.

Buyers of motor insurance can benefit from premium discounts of up to 50 per cent and shopping vouchers, depending on the policy, while term insurance premiums are available at discounts of up to 60 per cent.