Setting up automatic payments for your debts sounds simple enough. But many people only automate minimum payments and wonder why their debt takes forever to disappear. The real power comes when you automate minimum plus extra amounts each month.
This strategy changes everything about debt repayment. Instead of hoping you’ll remember to send extra money, the system does it for you automatically. No decisions needed. No forgetting. Just steady progress toward becoming debt-free.
Why Automating Extra Payments Makes Sense?
The UAE recently launched improved direct debit systems that make automated payments easier than ever. When you only pay the minimum, you mostly cover interest charges. The actual debt barely moves.
Automating minimum plus extra payments attacks the principal directly. Every extra dirham goes straight toward reducing what you actually owe. This cuts down both the time to pay off debt and the total interest paid.
When to Start Automating Extra Payments?
Build a small emergency fund.
Save at least AED 3,000 to 5,000 before you lock in automatic extra payments. This prevents you from adding new debt when car repairs or medical bills show up unexpectedly. Without this cushion, one emergency can derail your entire plan.
Stabilize your income
If your monthly salary varies a lot, wait until it becomes more predictable. Freelancers and commission-based workers should track their income for three months first. Find the lowest amount you earned in any single month and base your automated payments on that number.
Clear any bounced payment issues.
UAE banks take returned payments seriously. Make sure your account never overdrafts before setting up automatic transfers. Check your account balance patterns and identify your lowest point each month. Your automated payment should happen a few days after your salary arrives.
Review all your debts.
List everything you owe with the interest rates. Credit cards at 30% interest need different treatment than personal loans at 8%. Understanding your full debt picture helps you decide where to send extra payments.
Calculating the Right Amount for Extra Payments
Use the 50/30/20 approach.
Fifty percent of your income covers needs like rent and food. Thirty percent handles wants and extra debt payments combined. Twenty percent goes to savings. If you’re paying off debt aggressively, shift some of the 30% toward extra debt payments.
Consider your debt-free date.
Online calculators show how extra payments speed up debt payoff. An AED 15,000 credit card balance at 2.5% monthly interest takes 8 years to pay off with minimum payments. Add AED 300 extra monthly, and you’re done in about 3 years. That’s powerful motivation.
Setting Up Automated Payments in UAE Banks
Standing orders
This traditional method moves a fixed amount from your account to your credit card or loan on a set date each month. Log in to your banking app, find standing orders or recurring payments, enter the amount and frequency, and you’re done.
Direct debit systems
The UAE Central Bank approved direct debit platforms that make recurring payments even smoother. These systems connect directly to your bank account and pull payments automatically with your authorization. The process is paperless and uses UAE Pass verification for security.
Mobile banking apps
Modern banking apps let you schedule payments months in advance. Some even calculate the total interest saved when you add extra payments. The app sends reminders before each payment process, giving you a chance to adjust if needed.
Conclusion
The difference between knowing about automated payments and actually using them is action. Here’s how to start:
Log in to your banking app today. Find the section for standing orders or recurring payments. Pick one debt to focus on. Calculate a realistic extra payment amount. Set up the automation for three days after your next salary arrives.
That’s it. Five minutes of work sets up months of progress. You can always adjust the amount later, but getting started matters most.
