You might not be aware of some of the hidden credit card fees in UAE lurking in some corners.
The best way to avoid these hidden charges is to be aware of them before you use your credit card in UAE.
Here are 5 of the hidden credit card fees in the UAE:
1. Cash advance fee
When you’re in the midst of an emergency and need to borrow some money, credit cards can seem like a blessing but there are some drawbacks that you should take into account.
The amount you can borrow depends on your credit limit, but it is usually between 50% and 80% of your credit limit.
In the UAE, the cash advance fee that banks and credit card companies levy is 3 percent of the amount withdrawn, with VAT included.
In addition to this charge, some banks also charge a higher monthly interest rate on cash advances, which can be 0.25 to 0.75 percent higher than the rate on regular retail transactions.
2. Over-limit fee
If you’ve exceeded your credit card limit, you may see a hefty new charge on your next statement. This fee called an “over-limit fee,” is a penalty for going over your credit limit. It can range from AED 200 to AED 300, depending on your card provider.
Not only will exceeding your card limit cost you in fees, it will also hurt your credit score. The best way to avoid these consequences is to keep a close eye on your credit card usage.
3. Credit shield
A credit shield is an insurance cover that can help repay a cardholder’s outstanding balance in case of death, disability, critical illness, or involuntary loss of employment. However, it doesn’t insure against credit card fraud.
The credit shield fee (or monthly premium) varies from 0.5 percent to 0.99 percent of the outstanding balance across most banks in the UAE.
Despite its benefits, the credit shield isn’t free – like most other perks, it comes with a fee.
4. Balance transfer fee
If you’re looking to reduce your credit card debt, you may be considering a balance transfer. This is when you transfer your current outstanding balance to another credit card with a lower or even zero percent interest rate for a limited period of time.
Balance transfers can be a great way to pay off your debt faster and more effectively. However, there are some fees to be aware of before making the switch.
Banks usually charge a processing fee for balance transfers, which can be 1 to 3 percent of the amount transferred. There may also be additional cancellation and early settlement fees.
5. Dynamic currency conversion
Many credit card holders are unaware that their card providers charge them a foreign transaction fee every time they use their card overseas. While this fee isn’t immediately obvious, it’s important for cardholders to be aware of this cost.
While using your credit card abroad, you may be asked by the merchant if you would like to pay in the local currency or your home currency. You might choose the latter because it’s familiar and you can see the actual cost displayed in Dirham. However, this would be a mistake! You would be charged an unfavorable currency exchange rate determined by a foreign third-party operator, which would unnecessarily drive up the cost of your purchase. And you would still be paying the foreign transaction fee determined by your card provider.
FAQs
- How do I avoid credit card fees?
The easiest way to avoid finance charges is to pay your balance in full and on time every month. Credit cards are required to give you what’s called a grace period, which is the span of time between the end of your billing cycle and when the payment is due on your balance.
2. How do I avoid credit card fees?
The easiest way to avoid finance charges is to pay your balance in full and on time every month. Credit cards are required to give you what’s called a grace period, which is the span of time between the end of your billing cycle and when the payment is due on your balance.
3. What are the hidden costs Who pays them?
Industrial development has many “hidden costs†in the form of damage to the environment and health problems for people. These hidden costs are usually “paid for†by the people who must live with the harm from toxins, not by the industries that cause this harm.
4. Is it legal to charge credit card fees?
Credit card surcharges are optional fees added by a merchant when customers use a credit card to pay at checkout. Surcharges are legal unless restricted by state law. Businesses that choose to add surcharges are required to follow protocols to ensure full transparency.
5. How do you explain a convenience fee?
A convenience fee is levied by a merchant for offering customers the privilege of paying with an alternative non-standard payment method. Merchants can process convenience fees in all 50 states. A surcharge is levied by a merchant for customer purchases made with a credit card.
6. How to avoid interest charges?
Paying your bill in full every month is the simplest way to avoid interest. If you can’t afford to pay your bill in full, reduce your spending or consider a 0% APR card that doesn’t charge interest for up to 21 months.
