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Personal Finance - Case Study - Essay Example

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However, DOHA’s charges do not exceed 75% of the holder’s monthly basic salary plus social allowances. AL AHLI’s charges vary depending on the type of credit and account held…
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Credit Card and Checking Account Comparison of Outline Introduction Credit Card and Checking Account Comparison Conclusion
Comparisons between a Credit Card and Checking Accounts
Financial Services Features
Credit Card
Checking account
DOHA
AL AHLI
DOHA
AL AHLI
APR (annual percentage rate): Is it fixed or variable?
VARIABLE
VARIABLE
Fixed
Fixed
Monthly fee
not to exceed 75% of monthly basic salary plus social allowance
Vary depending on the form of credit and type of account
Free
Free
Overdraft fee
90% of your balances held
95% overdraft on your deposit amount
95% of your balances held
98% overdraft on your deposit amount
Transaction fees (balance transfers, deposits, withdrawal etc.)
Vary according to the transaction. For example; cash withdrawal costs QAR 15 for a transaction outside Qatar
Vary according to the transaction. For example; Cash withdrawal costs QAR 10 for amounts less than QAR 1000
Free
No charges
Minimum Balance
QAR 15,000
QAR 10,000
No minimum balance required
No minimum balance required
Penalty if money drops below the minimum balance
QAR 15
QAR 10 (balance below 500)
No penalty
No penalty
Other features
Top up an existing Ahlibank loan.
Buyout loans held with other banks in Qatar
Al Asriya Ladies Card
Complementary VIP airport lounge access
Allowing card holders access to a wide range of 2 for 1 offers at leading restaurants, spas, retail outlets, sports and entertainment facilities
Free holidays
Overseas offers
Fly Now Pay Later offers
Comparisons and Lessons from DOHA and AL AHLI’s Credit Card and Checkout Accounts
The credit cards offered by both DOHA and AL AHLI require monthly bills while debit cards do not. However, DOHA’s charges do not exceed 75% of the holder’s monthly basic salary plus social allowances. AL AHLI’s charges vary depending on the type of credit and account held by a customer. This means that AL AHLI’s charges may be less or more than what DOHA offers. These comparisons suggest that it is wise to get credit cards from DOHA if an individual earns an average salary. AL AHLI’s offer is best for those who earn lump sum salaries. The checking accounts of both DOHA and AL AHLI are free, and thus there is no benefit or loss a customer gets when he chooses any of these (Elsamadisy, AlKhater, & Mahmoud, 2006). The lesson learned is that DOHA offers cheaper rates than AL AHLI, and their credit cards are easy to service.
The annual percentage rates of both banks vary for credit cards but are fixed for checkout accounts. This means that the flexibility and affordability of annual interest rates depend on the amount of money an individual has in the bank. On the other hand, there is no difference whether a person has a DOHA or AL AHLI’s checkout account because both banks offer fixed annual percentage rates. The lesson learned is that it is easy to finance checkout accounts than credit accounts in terms of annual percentage rates.
The overdraft fees for DOHA’s credit card and checkout accounts are 90% and 95% of the balances held respectively. AL AHLI’s fees are higher at 95% and 98% for the credit card and checkout accounts respectively. DOHA offers lower rates by 5% and 3% for the respective account (Hossain, & Leo, 2009). Higher overdrafts attract higher fees on both accounts in both banks. The lesson learned is that DOHA offers cheaper overdraft charges for both credit cards and checkout accounts than AL AHLI, even though, the differences are slim.
The transaction fees that credit card holders pay in both banks vary depending on where the transaction is made (Elsamadisy, AlKhater, & Mahmoud, 2006). DOHAs costs depend on the location while AL AHLI charges depending on the amount. For instance, DOHA charges QAR 15 for transactions outside Qatar while AL AHLI charges QAR 10 for amounts less than QAR 1000. Both Banks do not charge any transaction fees for their checkout accounts. The lesson learned is that is advisable to use DOHA’s credit card when traveling overseas. However, a foreign traveler wishing to withdraw a lot of money should consider using AL AHLI’s services to enjoy the huge discounts offered on huge transactions.
Customers are required to maintain a minimum balance of QAR 15,000 and QAR 10,000 in DOHA and AL AHLI’s accounts if they have credit cards. However, there is no minimum balance for checkout accounts offered by both banks. DOHA charges QAR15 while AL AHLI charges QAR 10 penalty if money drops below the minimum balance in their credit card accounts. However, they both do not penalize their customers for withdrawing all their money in checkout accounts. The lesson learned is that DOHA requires customers to leave large minimum balances in their credit accounts while AL AHLI has a lower demand.
Other unique features offered by DOHA to its credit card account holders include top up to existing Ahli Bank and buyout of loans held with other banks in Qatar (Hossain, & Leo, 2009). In addition, it offers complimentary VIP airport lounge services and access to a broad range of 2-for-1 offers at various entertainment and recreational facilities. AL AHLI offers Al Asriya ladies cards for its credit card holders and free holidays, overseas offers and fly-now-pay-later offers for its loyal checkout account holders. The lesson learned is that both banks offer attractive and unique features that clients will enjoy depending on their preferences.
DOHA’s credit card account is the best because it has a low monthly and annual fee and its transaction charges are cheap and affordable. On the other hand, AL AHLI’s checkout account is the best because it offers flexible rates and has minimal restrictions. A checkout account is better than a credit card account because it is cheaper and offers most services free of charge.
References
Elsamadisy, E. M., AlKhater, K. R., & Mahmoud, F. I. (2006). Department of Economic
Policies Qatar Central Bank. New York: Wiley.
Hossain, M., & Leo, S. (2009). Customer perception on service quality in retail banking
in Middle East: the case of Qatar. International Journal of Islamic and Middle Eastern Finance and Management, 2(4), 338-350. Read More
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