Banks in the country will close credit cards with balances exceeding the allowed credit limit starting May 1st, as per new terms and conditions sent to customers, a copy of which was obtained by Emirates Today.
Under the updated credit card terms, banks now mandate receiving advance authorization and paying a fee of up to 300 dirhams whenever a negative balance on the card is utilized to prevent card suspension.
Tamer Abu Bakr, a banker, informed Emirates Today that certain banks encountered significant issues when customers withdrew amounts exceeding their credit card limit. Subsequently, customers objected to the fees or interest charged on the negative balance upon repayment. Consequently, these banks opted to suspend cards when used beyond the allowable limit by their owners.
Abu Bakr emphasized the importance of not exceeding the credit limit to maintain a positive credit assessment. He mentioned that customers can request an advance amount above the card limit within certain parameters to prevent the card from being declined.
Abdullah Ibrahim, the banker, mentioned that banks typically permitted small negative payments up to 50 dirhams each time. However, accumulating a negative balance incurs interest and fees that can sometimes double the original amount, leading to issues within the banking sector. Most banks have stopped allowing customers to exceed their credit limit or use negative balances. It is important for credit card users to be aware of any fees or interest charges before requesting additional balances or using the card in a negative balance, as these charges are typically higher than those on the card itself. Emphasizing the significance of ensuring the consumer does not have any negative balances to keep a positive credit rating.
