Many consumers in the UAE slip into debt without realising it. Here are key early warning signs—such as relying on BNPL for groceries—that may indicate you are heading toward a financial trap.
Debt can be one of the biggest barriers to financial stability, often accumulating gradually until it reaches a level that feels overwhelming or difficult to manage.
In the UAE, easy access to credit and rising lifestyle expectations mean many residents rely on credit cards, personal loans, and Buy Now, Pay Later (BNPL) services to manage expenses. While these tools can provide short-term relief, they can also obscure the true extent of overall debt.
Relieving debt is easier said than done, but experts say the first step is recognising how it accumulates in the first place.
How do people end up in debt traps?
With a wide range of financing options available, many UAE residents are increasingly turning to alternative methods to manage larger expenses. These include Buy Now, Pay Later (BNPL) services such as Tabby and Tamara, multiple credit cards, rent-to-own schemes, and salary-linked loans.
According to Alexander Varghese, Sales Director of Alternate Channels at Continental Group, these smaller, split payments can gradually accumulate without individuals fully realising the total amount owed.
“The most common way people fall into debt traps is not through a single major decision, but through small decisions that, over time, build into debt that is often recognised too late,” said Alexey Nuzhnyy, CFO of ESAB MEA, Russia and CIS, and visiting professor of corporate finance at Moscow University.
He added that when income stability changes or unexpected expenses arise, this structure can quickly become fragile. Easy access to credit cards, personal loans and lifestyle financing, he said, can create a “false sense of affordability.”
Early warning signs
While debt can build up unnoticed, experts say there are clear warning signs that appear well before it becomes unmanageable.
Varghese noted that one of the clearest indicators is using BNPL services to cover essential expenses such as fuel or groceries. “This suggests that income is no longer sufficient to meet basic living costs,” he said.
He added that having multiple BNPL plans running at the same time is another strong signal of financial stress, particularly when repayment schedules begin to overlap.
Another key red flag is when income is no longer enough to service existing debt. “This is more common than many realise in the UAE, and it tends to worsen quickly if not addressed,” he warned.
Nuzhnyy also pointed to loss of visibility over total debt as an important warning sign, particularly when individuals can no longer clearly track how much they owe across different products.
When is it too late?
A commonly used benchmark is the share of income going towards debt repayments. Varghese said that if more than 25–30% of monthly salary is used to service debt, it is often a sign that financial flexibility is shrinking and risk is increasing.
He added that cash flow pressure is another indicator: “If monthly income does not comfortably cover repayments, or if additional credit is needed for routine expenses, the debt level is no longer sustainable.”
Steps to avoid debt
Experts recommend several practical steps to manage and prevent debt buildup:
- Track spending
- Limit BNPL usage to one platform
- Avoid overlapping repayment plans
- Monitor repayment dates closely
- Avoid stacking multiple loans
According to debt collection agency AW Holding, failure to repay debt can lead to serious consequences, including bank account freezes, asset seizure, credit score damage, and wage garnishment, where creditors are legally allowed to deduct a portion of salary to recover dues.
