Credit card holders in the UAE are subject to unethical practices by sales agents, and with many credit card customers unwilling to read the contract carefully, most do little to help themselves. Below are the most common fees that come with credit cards.
Many UAE banks issue credit cards free of cost, i.e. no purchasing or joining fee and, in some cases, exemption from annual charges for a stipulated period of time after which they levy this additional issuance fee. Most sales agents will tell the customer that the card is ‘Free for Life’; however, this usually means an annual fee kicks in from the second year onwards.
Duplicate statement fee
Requesting a duplicate physical statement generally comes with a fee. In the case of credit card companies which offer periodic e-statements, requesting a primary physical statement will also attract a processing fee.
The most well-known fee amongst credit card users, it is the interest rate applied on the outstanding balance payable by the customer after the due date. It generally ranges between 2 percent to 4 percent monthly, amounting to an annual rate of 25 to 48 percent. According to bayzat, the average credit card interest rate is currently around 32.8 percent annually.
Late payment fee
Every time a credit card user makes a late payment, the credit card issuer charges a late payment fee which is either a fixed figure or a percentage of the outstanding balance.
This is a fee levied on withdrawing cash from an ATM using your credit card. Companies generally charge either a fixed amount or percentage of the transaction value, whichever is higher in most cases.
Overdraft or over limit fee
If the customer uses their credit card past the allowed credit limit, the credit card issuer levies an overdraft fee, which is either a fixed amount or a percentage of the overdrawn amount.
Foreign currency transactions
Should the customer use their credit card outside the UAE, credit card transactions made in other billing currencies will be converted at a wholesale market rate to the billing currency, attracting a processing fee.
Returned cheque fee
In case a cheque is not honored and bounces, the credit card issuer charges a fixed amount.
It is a fee for the insurance offered by financial institutions where in unforeseen and unfortunate circumstances, cardholders’ dues are taken care of. It is a percentage of the credit card’s monthly outstanding balance.