The Debt Panel: 'Can I consolidate Dh70,000 of credit card debt if I earn a low salary?'

The Abu Dhabi resident, from India, has a monthly income of Dh6,500

Illustration by Mathew Kurian 
Beta V.1.0 - Powered by automated translation

I am from India and work for a dredging company in Abu Dhabi earning Dh6,500 a month with food, accommodation and transport provided by my employer.

Two years ago I tried to apply for a loan to help pay for my sister’s marriage. Because of my low salary, the banks told me I was not eligible for a loan, particularly as I was on a temporary contract and was working offshore.

For now I am trying to at least make the minimum payment every month, but it leaves me with no money to spend.

I did manage to secure an amount of Dh28,000 from one lender, which I have since cleared after paying off Dh2,100 a month. Then my father became ill with kidney issues and I had to spend more on his medical expenses than I expected, which was hard as the only earner in the family.

So I started using credit cards, which has been the biggest mistake I could make. I now have four credit cards on which I owe:

Credit card 1: Dh16,000 (Dh1,000 over limit)

Credit card 2: Dh16,500

Credit card 3: Dh19,000 (Dh1,000 over limit)

Credit card 4: Dh19,000

Total: Dh70,500

I am now on a different contract, where I work two months on, one month off. In October I received approval for a loan but then the bank said they could not disburse it because I was working on a limited employment contract.

Until that point all my credit card payments were on time but then I missed a few payments. For now I am trying to at least make the minimum payment every month, but it leaves me with no money to spend.

I want to secure a loan that can consolidate these card balances so that I only make one monthly payment, rather than four. So far, I have not had any luck. How do I secure a consolidation loan on a lower salary? RS, Abu Dhabi

Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

With limited income to meet looming card repayments, this is a great time to rethink your finances and consider a well-rounded strategy to tackle the issue.

As you acknowledge, using cards as a long-term financing tool is a mistake – late payments and high outstanding balances often lead to significant charges that place the borrower under serious pressure. The more cards to your name, the greater the potential cost.

Given your financial circumstances, UAE banks may not be able to consolidate your debt if your monthly repayments exceed the Central Bank of the UAE’s Debt Burden Ratio (DBR) guideline of 50 per cent. Therefore, it is highly advisable to contact your bank and provide them with the full details of your situation to reach a sustainable and mutually beneficial course of action.

Ideally you would restructure all cards with a fixed monthly instalment plan at a lower rate. Give the bank evidence you’ve achieved this before and are committed to doing so again.

As living with significant debt can certainly be worrying, a great way to regain control over the situation is by tackling your spending. Do not spend any further on your cards. Simultaneously, find ways to boost funds through selling any assets you may own. Try to find other means of income during the month you have off every quarter. If you have any friends or family who may be able to support you, now is the time to contact them too.

Debt panellist 2: Ambareen Musa, founder and chief executive of

Given the restrictions brought about by your limited employment contract, qualifying for a regular loan or even a debt consolidation loan may not be possible. But there's another banking solution you can use to make your credit card payments more manageable – debt restructuring.

For those who have borrowed too much against their credit cards, debt restructuring serves a simple purpose: it helps ease the burden of repayments. So, how does it do that? Typically by reducing the total amount of monthly payments and/or reducing the total amount of principal and interest payable over time. In some cases, lowering the accrued fees and penalties can also make a huge dent in your total outstanding debt.

This might be an option for you because you have already maxed out some of your credit cards and have exceeded the assigned credit limit on these. So now, apart from the hefty interest being charged on your outstanding balance (effectively around 40 per cent per annum), you're also racking up over-limit fees, which can range anywhere between Dh200 to Dh300 across most credit card providers.

To make matters worse, you're clearly struggling to keep up with the minimum payments on all four credit cards. So you may have to start worrying about late payment fees too. The impact of missing credit card payments and exceeding the credit limit goes even further, causing your credit score to take a big hit. So you obviously need to find a way to cut down your credit card payments before you're forced to default on them.

As a starting point, focus on bringing down your credit card balance so it stays within the credit limit. Next, approach the credit card providers individually to ask for your credit card balance to be restructured into a fixed-tenure loan with a fixed interest rate throughout the tenure. Make sure you understand the terms of repayment properly, and get everything in writing. Treat this like a negotiation, and don't shy away from pushing for the most favourable terms for yourself.

Debt panellist 3: Steve Cronin, founder of

You got into debt trying to help your family and there are many people in the UAE facing similar problems. The issue is the use of debt due to a lack of planning ahead with your cash. The debt then plays havoc with your cash flow, making you vulnerable to any future problems.

Here’s how to avoid similar problems in the future. Your major living expenses are covered by your company, so without debt you can afford to save some money every month. This gives you resilience from the unexpected, such as losing your job.

Then you need to look ahead a few years. Your sister was likely to get married, so you should have saved every month towards this. Your parents, as they got older, were likely to get sick so you could have bought health insurance for them or put aside some money every month towards this possibility. So, try to anticipate expenses that will come in the future.

Next, find someone more senior at the bank who can assist you, especially as the loan was approved. Show them that you have a clear plan for your financials. You might as well tell them you will apply for the UAE’s insolvency process if they don’t help you. You would only be eligible if you are about to miss a payment or have missed a payment in the past 40 days.

Many banks have a minimum salary of Dh8,000 for consolidation loans but ask around. The fact your major expenses are covered by your employer would help. You may have to transfer your salary to that bank though. Is there any way to increase your earnings through overtime?

Meanwhile, do all you can to reduce your living expenses and try to keep up with the minimum repayments on the cards. Beyond this, focus on getting all cards below their limit so you don’t face over-limit charges and try to pay down one card a bit faster so that you only have three cards. Make sure you are not buying additional items with the cards. This will be a tough period, but effort in negotiating with the banks and saving money will pay off.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to