x Abu Dhabi, UAETuesday 23 January 2018

Read carefully, because there’s often a catch

We humans are conveniently selective when it comes to pretty much everything in our life — we hone in on information that backs up our decisions — and boy can we justify anything to ourselves.

Illustration by Gary Clement for The National
Illustration by Gary Clement for The National
I caught a glimpse of a Bollywood blockbuster being watched by the person sitting next to me on a flight this week. There was an elaborate party on screen to mark the launch of a new bank. And to much applause and fanfare, and little sincerity, a protagonist was committing to deliver exceptional products, service and returns to clients.

The next scene was that very person sitting across the table from a seemingly wealthy potential client — the banker stating: “We guarantee you 15 per cent growth”, or so the subtitles said.

One word came to mind: fool.

I am sure that the rest of the movie revolved around people jumping at the 15 per cent return without much attention to detail, and in the process losing their shirt or worse.

I too was sucked into a sales pitch a few weeks ago that was too good to be true.

I had just completed my first ever 10-kilometre run, and that had obviously compromised my ability to be a discerning judge of what is reasonable and what is fantasy.

A representative from a bank came up to me and said: “How would you like us to pay 10 per cent of your school fees?”

I thought: “Ooh, that would be super, yes please, thank you”.

He went on to explain that the bank would pay 10 per cent of my rent too, my utilities bills and much more – if I were just to take out the bank’s credit card. He said that this was a cashback card, and if I use it, I would get 10 per cent back on my spending.

I asked many questions, trying to figure out what the catch was. It seemed like such a great deal. And to add the icing on the cake, the card was free for the first year.

Well my friends, this isn’t the full story: yes, using the card will give a nice 10 per cent back on certain categories of purchases — I looked up the details on the internet — but simply put: you need to spend at least a monthly minimum of Dh1,000 to get the highest cashback rate listed, which is 10 per cent, there are only three categories of spending that qualify for this, and there is a cap on what you can get back.

The categories are utilities, school fees and supermarket purchases. There is a cap of Dh200 on what you can get back from spending on your utilities bill each month, Dh400 on what you can get back from your monthly supermarket bill, and Dh400 a month on your school fees – in other words, you’ll be entitled to a whopping Dh12,000 a year as an absolute maximum, which goes towards paying your next bill.

But if you don’t pay school fees, the total goes down to Dh7,200 a year.

You will get your cashback, which will come off the outstanding balance on your credit card, only by applying to redeem the points online or by calling the service centre. Pity it can’t automatically be put towards bill payment without extra effort on our part.

Now I’m not one to look a gift horse in the mouth, and yes, an extra Dh7,200 or, even better, Dh12,000 a year would go down quite nicely thank you. But that’s a far cry from 10 per cent total spending on my rent, school fees or life’s spend, as was put to me initially.

I’d like to think that my depleted energy reserves following the run were the reason I fell prey to counting my chicks before the eggs hatched; I was working out all the extra cash that could be floating around in my life if I used this card — based on what the professional salesperson had stated. But the truth is that I really wanted what I was being told to be real, even though I knew it wouldn’t be.

So my first reminder is: if it seems to good to be true, it’s not true.

The second reminder is a phrase I use: “being conveniently selective”. We humans are conveniently selective when it comes to pretty much everything in our life — we hone in on information that backs up our decisions — and boy can we justify anything to ourselves. Well, the seasoned salesperson who did his polished pitch — and then set his “boys” on me to get all my contact details — I’m proud to say that I had enough of my wits about me to say: “Don’t call me, I’ll call you”.

This person knew more than he was willing to share. But he was being conveniently selective about what to tell me, because of course he wanted to hook me and get me to metaphorically buy into it, before literally doing so. It would appear that he either resorted to colouring the truth, by informing me that 10 per cent of my rent, and all my monthly spending, would be “paid by the bank” – or that he too didn’t know the facts.

I believe in informed choice. Give me all the information, be truthful and let me come to my own conclusion.

I would have been extremely happy to learn that I could have some extra money in my life by taking out this card if this person had been upfront. Instead, being flesh and blood, I am now annoyed that I cannot have 10 per cent off my life’s spending.

This sort of incident happens every day, with representatives from many financial institutions.

Trust is the most valuable commodity, and my question is whether it’s the people I shouldn’t trust or the brands they represent.

Full disclosure and informed choice are today’s words. One leads to the other.

Nima Abu Wardeh is the founder of the personal finance website www.cashy.me. You can contact her at nima@cashy.me