Abu Dhabi: Banks have expanded the range of their offers aimed at families, coinciding with the start of the new school year, so that competition has moved from traditional discounts on back-to-school supplies to the school fees themselves.The competition included offers to pay fees in instalments with ‘zero interest’ for periods of up to 12 months when using credit cards, as well as cashback and relief from large financial payments. Two bankers said that banks are now competing more for customers' regular and basic expenses, rather than focusing solely on consumer spending, taking advantage of the high cost of tuition fees and their ability to increase card usage and retain customers for longer periods.They cautioned customers against the ‘zero interest’ offer, clarifying that it does not necessarily mean the instalments are completely free. They advised checking the processing fees, terms and conditions, minimum transaction amount, and early repayment costs before choosing the offer.Range of offersSpecifically, banks operating in the country have expanded the scope of the offers directed to families, coinciding with the start of the new academic year, so that the competition has moved from traditional discounts on back-to-school supplies to the school fees themselves, by offering cashback of up to Dh1,000, in addition to plans to pay the fees in instalments with zero interest for periods of up to 12 months, when using credit cards to make payments.A survey showed that these offers will continue until dates ranging between September 13 and 30, with varying terms of use, instalment periods, and processing fees from one bank to another.According to the analysis, a number of banks focused on reducing the value of large payments that families bear at the beginning of the school year, by allowing the conversion of tuition fees paid using credit cards into monthly instalments, while other banks moved towards providing refund amounts related to the value of the fees paid.Banks have also made it possible for credit card holders to convert school and university fees into zero-interest payment plans with no fees, with the possibility of spreading payments over a period of up to 12 months.Other banks also offered cashback of up to Dh1,000 on tuition fee payments, depending on the total qualifying expenditure. The customer receives Dh100 when spending Dh5,000, and the value of the cashback gradually increases to reach Dh1,000 when spending Dh35,000 or more, with the option to convert payments into a six-month instalment plan with zero interest.Another category of banks allowed the conversion of school fees into a zero-interest payment plan for three, six or 12 months, for an administrative fee of Dh50, reflecting the difference in the actual cost of the offers, despite a number of them participating in providing instalments without interest.A fourth category of banks also offers school fees instalments with zero interest for up to 12 months, with processing fees varying according to the instalment period and method of payment, while processing fees in some transactions reach 4% when choosing an instalment period that extends to 12 months.Large paymentsFor his part, banker Mohammed Ghazi said that “the increasing competition between banks for education payments reflects a shift in the strategy of bank card offerings towards basic family expenses, especially since tuition fees represent a large and concentrated financial payment in a limited period of the year, which makes instalment and cashback options more attractive to customers.”He added that “the benefit to banks is not limited to increasing the use of cards, but extends to strengthening the customer’s connection with the bank and increasing the volume of its transactions, especially with sectors such as education and health becoming key areas of competition for family spending.”Liquidity managementFor his part, banker Tamer Abu Bakr said that “interest-free instalment plans give families the opportunity to spread large obligations over several months, instead of draining a large part of their liquidity at the beginning of the school year, especially for families with more than one student in schools or universities.”Abu Bakr warned that the phrase “zero interest” does not necessarily mean that the instalment is completely free, calling on customers to check the processing fees, conditions, minimum transaction amount, and early repayment cost before choosing the offer.He continued: “Interest-free instalments give families more room to manage their finances during the first months of the school year, especially for families paying fees for more than one student at the same time, while cash refunds represent an actual discount on the cost of education.”He stressed that banks are now competing more for customers’ regular and basic expenses, rather than focusing only on consumer spending, taking advantage of the high value of tuition fees and their ability to increase card usage, attract customers and retain them for longer periods.
