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Ask Dr. Dirham
  • Ans: Financial literacy describes individuals’ ability to manage their personal finances, their awareness of different investment options, and their ability to assess risks and recognize opportunities to improve their financial status.

  • Ans: Choosing a suitable bank depends on a number of different aspects, including the services offered by the bank, the location, the types of benefits they offer to customers, in addition to their service charges and interest rates. Researching the different types of banks available will help you in choosing the bank that is most suitable for you.

  • Ans: Generally, most banks offer two main types of accounts, current and savings. A current account allows you to place your money and carry out a number of banking services, like withdrawals and writing checks. A savings account provides the additional feature of paying you an annual interest sum for placing your money in the account. Islamic banks also offer Shariah-compliant accounts.

  • Ans: There are several steps you can take when applying for loan, such as researching your different options, comparing issues like interest rates and monthly installments, in addition to enquiring about additional fees, like processing charges for example.

  • Ans: There are different categories of cards you can acquire, which differ in benefits, credit range and interest rates. The first category is standard cards, which most people own. Prestige cards such as silver, gold and platinum cards, usually offer a higher credit limit and lower interest.

  • Ans: A credit card default occurs when an individual, entity or business is unable to repay credit card debt. After a certain period of time of continually accumulated debt, you are no longer able to use your card until you repay some of the amount you owe.

  • Ans: The best way to manage your debt is to keep track of what you are making, your expenses and how much you owe, whether in terms of loans or credit cards. Make sure you make all your payments on time, and try to pay more than the minimum when possible to avoid accumulating interest.

  • Ans: An individual or company can be declared as bankrupt if they are unable to pay back fees they owe to debtors or to creditors. Bankruptcy is a legal standing and occurs after a certain accumulation of debt over a period of time.

  • Ans: To start your own business, you need to research what type of business you would like to have, decide how you are going to finance your business, research available resources to provide support in terms of funding, training, or marketing, and consider how much of your own money you will place into the project and whether you will involve any partners.

  • Ans: A long-term approach to investing offers the best strategy for taking advantage of the higher return potential. It’s best not to try to “time the market”, or move in and out of investments in an effort to buy before prices increase, or sell before they decline. The best alternative is to develop a long term strategy.