Consumers in the GCC owe an estimated $7.7bn in outstanding credit card debt, according to new figures from research and advisory firm Lafferty Group.
An average of $1,135 is owed on each of the 6.8 million credit cards in the region, according to Lafferty data seen by Arabian Business.
The figures are based on research conducted by Lafferty’s World Cards Intelligence unit, which compiles market and competitor intelligence on credit cards and consumer finance across 65 markets worldwide.
According to the London-based firm, outstanding debt on credit cards in the six GCC nations peaked in 2009, at just under $8bn.
Lafferty added that not all of the outstanding debt will be reclaimed. Gulf banks are expected to write off close to $600m in net-credit losses on cards in 2010, the firm said.
“Unemployment has been rising and people can’t afford to pay off their credit cards, which is typically the first line of product to go,” Andrew Neeson, head of World Cards Intelligence and Consumer Finance Research at Lafferty, told Arabian Business.
“People tend to pay off their mortgage first and credit card last, if they’re struggling,” he added. “Across the GCC region they employed a lot of outside workers from different countries, and a lot of those people have left without paying their debts.”
In May this year a report revealed that credit card defaults were the main reason behind expats skipping the UAE without settling their debts in 2009. A sharp rise in credit card-related skips was seen last year with 66 percent of all departures attributed to the problem, compared to just 30 percent in 2003, the report by Orion Analytics said.