How to Avoid the Debt Trap in UAE

Dubai at Night

Dubai at Night. Source:

No one gets imprisoned due to debt. This overused line may apply in the Philippines and other places, but definitely not in UAE. In fact, a lot of OFWs are detained because of their unpaid loans, which they took out through their credit cards.

Just recently, the Department of Foreign Affairs has issued an advisory against taking out such a loan, because of the alarming increase of Filipinos being imprisoned for their debts. They also warned against issuing bounced check because it is considered a criminal offense. In a country that imposes travel ban for civil cases, the last thing you want to happen is to be charged with any violation in UAE.

But why do OFWs get lured into this debt trap?

Because of a promise of low interest rates. loans and credit cards in UAE have amazingly low interest for borrowers, which is why a lot of Filipinos take the offer. While it is okay to borrow money when used wisely, it is a bad idea to do so just for the heck of it, or simply due to low interest. Your debt is still a liability no matter how small, and imprisonment will not clear it out.

What most OFWs fail to see, however, is the staggering hidden charges in the fine print. When debts pile up, repayments could become a struggle and they will be indebted to the banks or, worse, loan sharks.

How can OFWs avoid debts?

It is a sad fact that even before Filipino workers has clocked in; they are already deep in debt. Some of them borrow money to pay for the employment processing, passport and visa application, travel to Manila for an interview, etc. This makes an opportunity to clear their debts the moment they arrive in UAE very tempting that they take it without thinking about the consequences. Rather than risk imprisonment, you should work to avoid owing people money.

  • Be financially literate

Find out how you can harness and maximize the use of your money. Make sure to include your family in the learning process to erase any embedded ideals. Most of the people back home would think you have plenty of money because you work abroad. They won’t have qualms about spending your hard-earned cash, because there’s more where it came from. Worse, they will be totally dependent on you, including distant cousins and whoever it is who claims to be a relative.

To avoid the vicious cycle of just trying to make ends meet or coming home broke, learn more about how to best deal with your finances. Find out how you can make your money work hard for you.

  • Have a budget and stick with it

Both you and your family have to do the same. You are allowed to reward yourself once in a while, but don’t overdo it. People back home should not overspend your earnings as well. Make them understand what you are going through overseas, so they will have more appreciation of every penny you send them.

  • Avoid any offers of get-rich-quick schemes

How many Filipinos have been scammed with offers of investments that double or triple in just a short amount of time? Ask any financial advisor and they will tell you that such a promise will never happen. Who doesn’t want to get rich? Just make sure you tread carefully in your investment, so you don’t end up losing everything and in deep debt trouble.




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