Credit cardholders in the United Arab Emirates may be in for some summer cheer as the country’s central bank may cap annual interest rates and fees.
The Central Bank of the UAE on Jan. 12 sent a notice to the 23 domestic and 28 foreign banks that issue credit cards in the country asking they submit a report on the interest rates and fees they impose.
While the notice did not explicitly say the request is a prelude to impose ceilings on such rates and fees, banks are expecting such an announcement, a banker with a UAE-based foreign bank who wishes to remain anonymous, tells PaymentsSource.
“The notification asked for detailed information on all fees and interest rates charged by banks on card services, outstanding debt, withdrawn funds, debt defaults etc.,” he says. “It all points to this [ceiling on rates and fees].”
UAE banks charge a Middle Eastern high of 27% to 36% credit card interest rates, which compares with an 18% average rate in such countries as Qatar and Kuwait, he explains.
“Our sources tell us that the central bank would look to impose a maximum annual interest rate of 18%,” the banker says, noting the central bank has publicly decried the country’s lack of regulation on credit cards.
What do you think about this? Send us your feedback. Click Here.