UAE Debt Trap Warning: Residents Urged to Monitor 50% Debt-to-Burden Ratio Early

UAE financial advisors are warning residents to monitor their Debt-to-Burden Ratio (DBR) as the primary indicator of potential insolvency. While the Central Bank of the UAE mandates a 50% DBR cap—meaning no more than half of a person’s monthly income should go toward debt—many residents cross this threshold through unmonitored credit card spending and personal loans. Early Indicators of Financial Distress The transition from manageable credit use to a "debt trap" often begins with subtle shifts in payment behavior. Experts identify the primary red flag as consistently paying only the 5% minimum balance on credit cards. With monthly interest rates on UAE credit cards typically ranging from 3% to 3.5%, paying only the minimum ensures the principal balance remains nearly unchanged while the total debt grows exponentially. Other critical signs include using credit cards to pay for essential utilities or rent, and "loan-stacking"—the practice of taking a new personal loan to settle existing credit card balances. Residents who find themselves unable to contribute to a basic emergency fund or who rely on "buy now, pay later" (BNPL) schemes for daily expenses are likely already in a…