Text size:

  • Small
  • Normal
  • Large

UAE credit card interest rates are too high

Building a healthy credit climate is everyone’s responsibility. Individuals, banks, educators and the authorities are all responsible for helping to make this happen.

For many people, a credit card is a basic tool of modern life. But like most tools, it can harm anyone who uses it carelessly.

That seems to be especially true in the UAE: as The National reported yesterday, the average annual percentage interest charged on credit cards issued in this country is 37.75 per cent. Compare that to an average rate of 17.5 in the UK; rates elsewhere in Europe are also around that level.

The Federal National Council has for many years called on authorities to regulate bank loans to protect consumers. Easy loans, high interest rates and over-lending are some of the issues that have been highlighted. And yet the trend persists.

As yesterday's report noted, UAE banks focus their lending on branding with fast cars and football clubs, among other marketing approaches aimed at young men, in particular.

Of course, consumers are responsible for getting themselves too deeply into debt. But banks also have responsibility. And the authorities have a big role to play, in regulating predatory practices and in better consumer education.

In June last year, Sultan Al Suwaidi, governor of the Central Bank, told the FNC that banks would soon be punished for encouraging reckless borrowing. This law will be welcome but so far is not on the books.

FNC members have for years been calling for more responsible lending, amid reports of people having to pay a crippling percentage of their salaries to cover debts - despite existing laws that cap debt payments at a third of salary. Debts are often cited as a reasons for marriage break-ups.

There have been campaigns to raise public awareness of the consequences of reckless borrowing. More and better such campaigns, aimed at teenagers and preteens, are needed. Few understand that at 42.5 per cent - the top rate on one UAE credit card - the cost of a purchase can double in just two years.

It would also help if the banks had access to a UAE-wide credit bureau: In other countries, efficient credit checks let a bank make sure a borrower will be in a position to repay a loan.

Building a healthy credit climate is everyone's responsibility. Individuals, banks, educators and the authorities are all responsible for helping to make this happen.

Back to the top

More articles


Editor's Picks

 Shah Rukh Khan performs at the IPL Gala dinner to open IPL VII at the Emirates Palace hotel in Abu Dhabi.

In pictures: Shah Rukh Khan stars at IPL Gala dinner in Abu Dhabi

The superstar entertainer Shah Rukh Khan on stage last night at a gala dinner to launch the Indian Premier League cricket tournament.

No words can describe this April 17, your captions will

Have a catchy caption for this picture. Share it with us and we might publish it and reward you.

 When this 1856 British Guiana One-Cent Magenta stamp goes under the hammer at Sotheby’s in New York on June 17, it is expected to attract a world record bid for a single stamp of up to $20 million (Dh73.4m). Courtesy Sotheby’s

Rare 1856 stamp up for auction at Sotheby’s

This is one of the world’s rarest stamps and when it goes up for auction in June it should fetch $20million. Its history since it was issued in 1856 is fascinating – and includes one murderous chapter, as Jonathan Gornall reports

 A customer browses the selection of property adverts posted at the Better Homes office in the Gold and Diamonds Souk in Dubai. Lauren Lancaster /The National

What to consider when spending Dh6m on a luxury Dubai apartment

Property expert Mario Volpi explains the five key elements apartment buyers in Dubai should consider when property hunting to ensure they pick a pad that holds its value.

 Iranian President Hassan Rouhani greets supporters after his arrival in Zahedan, the regional capital of Sistan and Baluchestan province on Tuesday, April 15, 2014. During Mr Rouhani's two-day visit, he will tour several other cities and hold meetings with local scholars and entrepreneurs. Maryam Rahmanian for The National

On the road with Hassan Rouhani

Iran's president is touring some of Iran's most underdeveloped provinces. Foreign correspondent Yeganeh Salehi is traveling with him.

 Barcelona’s Lionel Messi plays with a rugby ball during a training session at Ciutat Esportiva Joan Gamper training camp, near Barcelona in Sant Joan Despi, April 15, 2014. REUTERS/Gustau Nacarino

In pictures: Barca play a little rugby before Copa del rey final

Barcelona and Real Madrid will play in the Copa del Rey final on Wednesday night but the day before the match, Braca players played a little rugby during a training session at Ciutat Esportiva Joan Gamper training camp, in Sant Joan Despi, Spain. Barca meet Real Madrid on Wednesday at 11.30pm (UAE time) and the match will be on BeIn Sports.

Events

To add your event to The National listings, click here

Get the most from The National