Bank interest rates ‘too high’
Kipp readers believe banks are charging too much interest on credit cards, loans and mortgages, according to a recent poll.
January 31, 2010 11:12 by Ben Flanagan
Banks are charging too much interest on credit cards, loans and mortgages, according to a survey of Kippreport readers.
Two-thirds of readers believe bank interest rates are “too high”, with only 19 percent saying that rates are “about right”, and 15 percent of respondents saying that charges are “on the low side”.
The news comes on the back of a Kipp survey which found that UAE credit card customers pay twice as much interest compared with their UK counterparts. According to the survey, global credit card providers charge UAE consumers an average monthly interest rate of 2.382 percent – more than double the average rate in the UK.
Some banks plan to increase rates further. HSBC, for example, will increase the rate on its Premier Credit Card from 1.85 percent to 2.25 percent on February 1st, according to information published on its website.
Kipp readers reacted angrily to the findings. One calls for a change in legislation to curb “excessive” charges. “Banks are grossly overcharging for credit cards and have been doing so for years. It is simply another example of the sheer greed shown by the banks and it is about time that legislation was brought in to curb their excesses,” wrote the reader.
One reader doubts whether the situation could ever change, alleging that there are too many conflicts of interest among officials. “When the government officials, regulators and business sponsors are one in the same people… what do you expect?” asked the reader.
Another reader points the finger at Islamic lenders, which they claim are “even worse than the conventional banks as they are able to hide behind the ‘we don’t charge interest’ claim and instead charge extortionate ‘profit’ rates”.
The interest rate issue was highlighted in the recent claim by a group of Mashreqbank mortgage holders, who have complained to the UAE Central Bank over increased interest charges. The action came after Mashreqbank switched its base for calculating variable mortgage rates from the Emirates interbank offered rate (EIBOR) to an internally set rate. Under the new terms, customers’ could typically be paying more than 2 percentage points extra on their mortgage payments, which – according to a report in The National newspaper – says could cost an additional “tens of thousands of dirhams a year, and even more in some cases.”
Do you think UAE banks are overcharging? Have your say by submitting a comment below.