Cap on credit card fees coming?
In debt? Dream of paying less interest on your credit card? Your prayers could soon be answered.
The UAE central bank is working on new regulations for credit cards which could see it set interest rates and fees for the first time in the country following growing public complaints over bank charges.
A senior central bank official said it had been in touch with the country’s 51 banks to obtain information about rates and fees imposed on credit card holders – a move that could be a precursor to imposing ceilings on rates or fixing fees.
Rates on credit cards in the UAE range from 2.25% to 2.99% per month, the equivalent to about 27% to 35.9% annually. In comparison, they are typically 1.6% to 2% in Saudi Arabia; 1.5% in Qatar; 1.74% to 1.83% in Bahrain; 1.5% in Kuwait; and 1.5% to 1.67% for local banks and 1.75% to 2% for foreign banks in Egypt.
How does a credit card really work? cashy spills the beans.
Consumers across the UAE are disgruntled with the services received by banks, a study by cashy has shown.
A total 18% of the 2,800 people questioned by YouGov Siraj for cashy said they are ‘very dissatisfied’ or ‘dissatisfied’ with their main bank.
High services charges are the most cited reason for people thinking about voting with their feet and taking their business elsewhere, with 47% of respondents saying that is one of the reasons they are considering leaving their main bank. A lack of importance given to customers (42%), poor response to customer complaints (40%) and a lot of hidden charges and fees (37%) are the other main reasons.
In so much debt that you feel like running away from it all? IDID didn't. Here's her story. Maybe some of it resonates.
Pic credit: phanlop88/ FreeDigitalPhotos.net
What would you like to see in the new rules? Comment below...
© 2010-2011 cashy. All rights reserved.
Comments
That would certainly be good news, particularly if the rates came down to 1.5%. However, what I think would help people who are heavily in debt would be in the banks were a little more open to negotiation when it came to settling the outstanding amount. For example, I've approached several banks regarding my credit debt and whilst one of them was prepared to negotiate a restructure plan, none of them were prepared to agree to a freeze in interest and it's that, that is killing those of us who are trying to clear our debts.
it's very hard to advocate the use of credit cards with interest rates at 2.99% per month (35.88% per annum) so any cap or reduction is welcomed. Clear your debts as quickly as possible and learn from your experience by not using a credit card going forward. Banks here will not negotiate on interest rates and there is no one out there to offer support, which is something I would like to see change. The banks were largely at fault for allowing people to take such credit but that was the time we lkived in pre credit cruch and it is a different world now. Going forward, save what you can. As, in the words of Albert Einstein, "The most powerful force in the universe is compound interest".
Hi Rupert. Don't you think a great thing to embed in our psyche is calling them DEBT cards - they don't give us credit. They give us debt. Unless the card is paid back in full on every due-date... now.. going by the debt figures in the Gulf of nearly 140 BILLION dollars owed on credit cards, I think it's fair to say that that simply doesn't happen. What say you?
I can remember the great feeling I had when I finally paid off the 2 credit cards I had back then and how I swore to myself that I would never rack up any sort of credit card debt again. It is, of course advisable, to stay clear of credit cards all together (except for use in emergencies). Always take a day or 2 to think about whether you need to make that purchase.
Here's some more news. Some banks are charging AED 5 just for an account statement in anticipation (read: a precautionary measure) of the credit card fee cap.
And even more coverage here. The rates are expected to be capped at 18% per annum, a drop from the current 27-35.9%.
At cashy we encourage responsible lending and borrowing, but news is just in that an Abu Dhabi-based financial institution has launched a credit card offering what it says is the lowest interest rate on the market - 1.66% per month (19.92% per year), 0% for the first three months of joining and no membership fee for the first year. Remember to scour the small print before signing up for any deal, cashy people!
If you are registered you need to log in to comment, if not, please sign up.