As the New Year rolls around, one of the most popular resolutions people make is to save more. But with the rising cost of living, how can you stick to your goal?
According to UAE-based personal finance site Souqalmal.com, the trick to saving is not necessarily earning more. In fact, comparing and selecting the best financial products with better rates, lower fees and additional benefits can help you make sizeable savings.
Ambareen Musa, CEO of Souqalmal.com, said: “One way to keep your New Year’s resolution of saving more is to make your money work for you.
“The UAE is one of the most competitive markets, especially for financial products: making the effort to look around, compare and pick the best-fitting product can bring real savings with little effort.”
Here are Souqalmal.com’s top five tips to save more in 2013:
Make your money work for you
The average balance on a current account in the UAE is approximately AED 40,000. By moving funds you do not need for your everyday spending to a savings or fixed deposit account earning 4%, you can earn close to AED 1,600 a year. In the UAE, the Citibank NRI account offers 4%, followed by Noor Islamic Bank at 2.3%. However, make sure to look closely at any charges associated with the account, such as monthly maintenance fees.
Credit cards balance transfer
We all know it is best to pay off your credit card at the end of every month. However, banks are promoting balance transfer credit cards to offer customers a way to ease the repayments.
The average balance on a credit card in the UAE is AED 2,800 and, with an average monthly rate of 3%, your interest for the year could amount to AED 900. By transferring to a 0% balance transfer for the first 12 months, you can save up to AED 850, taking into consideration an average of 1% processing fee for the transfer. Remember that it is always best to pay off your outstanding balance monthly and, if you decide to transfer, always look at the fine print for hidden costs such as processing fee or the rate applied after the 0% transfer period is over.
Personal loans – salary transfer or not?
Most personal loans in the UAE require a salary transfer, without which the rate is typically higher. If you can afford to move over your salary and meet all eligibility criteria, including minimum salary, your rate can significantly decrease.
For example, Barclays’s personal instalment loan without salary transfer starts at a reducing balance rate of 19.99%, whereas its salary transfer loan starts at 6.49% on a reducing balance calculation. On an average loan of AED 100,000 over five years, your first year savings would be AED 13,500 and total savings over five years would be AED 40,500. Just make sure you check the early settlement fee, which is generally around 1% if you decide to switch.
Save on car insurance renewal
While insurance is required for peace of mind and in case of unexpected events, it is important that consumers ensure they are doing everything they can to get the best premium on renewal. First of all, get a quote from different providers.
Make sure you have asked for your No Claims certificate from your current insurer and make sure you check the items covered on your premium. Often the premium is packed with benefits which you do not require, but do end up paying for, such as GCC cover.
Cut your international calls bills
For most expats, one of the major costs can be international phone calls. But if you plan when to call family or friends abroad, you can potentially save quite a significant amount on your phone bill at the end of the month. For example, a one-minute call to Jordan at peak rate is AED 2.4/min, but if you call after 9 pm on a Du Plan or after 5 pm on an Etisalat plan, the charge would be AED 1.2/min, at a cost of 2 fils per second.
Make sure you do spend time comparing different products to see what fits best. It is worth the savings. To compare all the different financial, insurance and telecoms, visit www.souqalmal.com
*All calculations are based on information provided by the banks. Products and rates may change since publishing of this article. No products noted above are considered as advice – consult a financial advisor if you need help in deciding what is best for you.