[UAE] Understanding T&C for Credit Card Signup Offers!

Credit Cards in UAE

I had previously discussed how UAE banks have a very well developed credit card business. Please find the post here.

There are tons of credit cards and it means there are some sign-up bonuses as well. However, sign-up bonuses in this part of the world differ from what is offered in US or UK.

Sign-up bonuses in US tend to be straightforward – if you acquire a new credit card you would be eligible for points / miles upon payment of the annual fee or first transaction. In some cases, the bonuses are tied to a certain minimum spending (which in most cases is very achievable). For instance, American Express Hilton Honors Card is currently offering 75,000 Honors points upon spending $1,000 in 3 months.

It is usually not so easy in the case of several credit cards offered in UAE.

Emirates Islamic Skywards Infinite Card

Presently, one of the most actively promoted cards is the Emirates Islamic Skywards Credit Card. The credit card offers 100,000 Emirates Skywards Miles as a sign-up bonus. This is being promoted through newspaper advertisements, billboards, sponsored tweets etc.

It seems like a very appealing offer. After all, 100,000 Skywards Miles can cover a one-way trip in first-class from Dubai to London or a business-class trip to New York. I value Skywards Miles at about 3 cents so it seems like the bank is offering you a sign-up bonus of $3,000 or AED 11,000.

But, as you would expect, there are plenty of conditions. In fact, it is one of the most complicated structures I have seen in a credit card. Here goes nothing

• There is a Campaign joining fee of AED 2,000 ($540) & Annual Membership fee of AED 999 ($270). Yes you are reading this right, there are two separate fees!
• Your 3-month moving average retail spend has to be minimum AED 12,500 ($3,400). It means that if we consider the month of August, you average retail spend in June, July and August has to be AED 12,500 and above. If it is not so, you will be charged AED 500 ($136) per month. Practically, it means that you have to direct most of your spend to this card.

To be able to achieve the minimum spend for the entire year, your total spend has to be minimum AED 150,000 or $40,000.

I put a minimum return of 2% to all my credit card spends. So, my effective cost for this card will be AED 6,000 ($1,600). For this amount, I would get a sign-up bonus of 100,000 Skywards Miles and about 35,000 Skywards Miles on monthly spends. Therefore, my cost of buying a mile is AED 0.045 (1.2 cents).

However, if I were to miss the minimum spend for 12 months, my effective costs go up to AED 8,000 ($ 2,200). And the cost of buying a mile would be AED 0.08. Emirates sells miles at AED 0.11 per mile.

Conclusion

If you are confident of meeting the monthly spending criteria, this could be a relatively inexpensive way to acquire Skywards Miles. Of course, there are several other perks being offered. One of the major ones is Skywards Silver Membership which would give you

• Free seat selection in economy
• Complimentary Emirates business class lounge access
• Priority boarding and check-in
• Additional 12kgs of baggage allowance (important because of recent reduction in baggage for cheaper fares)

Personally, I would be wary of a card which needs such a high minimum spend every month at least for a year. But if you travel enough through Emirates and do not want to keep churning your credit card portfolio, it might be the right card for you.