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The great interest rate ripoff

The great interest rate ripoff

A Kipp survey has found that UAE credit card customers pay twice as much interest compared with their UK counterparts. With the row over Mashreqbank’s mortgage rates escalating, we ask whether the big banks are overcharging.

January 22, 2010 12:44 by

Consumers are vocal in expressing their dissatisfaction about bank charges in the UAE, with many turning to Twitter and other social networking sites to protest about interest rates and customer service issues.

While credit card interest rates were already high compared with other markets, some banks plan to increasing 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.

Still jittery after the subprime crisis in the US and subsequent credit crisis, other banks impose minimum salary levels before granting customers credit cards. Lloyds TSB, for example, says in a statement on its website that a minimum monthly income of AED25,000 is required to meet the criteria for any of its credit cards.

However, the higher charges imposed by international banks could be due to the less competitive consumer environment, and local restrictions on banks such as the number of branches they are allowed to open in the UAE.

Do you think UAE banks are overcharging? Have your say by submitting a comment below.

On next page: How UAE credit card holders pay twice the interest

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  1. Mike English on January 22, 2010 9:18 am

    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

  2. SL on January 22, 2010 6:55 pm

    In every country, the regulator plays the role to protect the interest of the individuals. Contracts with “small print” which permit an institution to ‘never lose’ are unfair and the regulator must not allow these to be used to take consumers for a ride.
    When the terms of pricing are agreed at the initiation of a contract, these should b upheld until maturity or termination by the client wilfully. Institutions are entitled to make a profit for their shareholders but the business risks & gains cannot be one sided.

  3. DC on January 24, 2010 11:39 am

    Islamic lenders 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 – Tamweel have been charging TEN percent on mortgages for over a year now where conventional banks are charging 7-8% and getting criticised (rightfully so) for making unfair profits given how little it is costing them to borrow because of the low EIBOR rate. Its time someone did an expose on the Islamic lenders……..

  4. Huda on January 24, 2010 12:33 pm

    Its much more tham that there were an article in Saneou Al Hadath the Arabic business magazine with proves that Standard Chartered bank Cahrged somebody (interest plus delay plus different names) over 100% of the amount drawn from his card, yes beleive it or not

  5. Craig on January 25, 2010 2:09 pm

    i have bee trying to find out who to complain to for many months about my Tamweel mortgage rate, anybody help with this? 10% is crazy, especially when the UK for example is about 2% at the moment for example.

    It’s disgraceful that the rates have gone up in the last 12 months, especailly when EIBOR has reduced and so short sighted by Tamweel. It’s like they’re trying to make it even harder for people to pay their mortgages and therefore default – what they’ll be left with is a house worth less than the loan in my case…

    I think the Dubai government needs to step in with these banks – they are completely holding back the healing process of Dubai and it was most of their fault that we’re in this situation in the first place – they make it like they are always on the winning side and it’s time they stopped taking advantage of the public to ensure their profits stay in the billions…

  6. Andrew on January 26, 2010 10:49 am

    When the government officials, regulators and business sponsors are one in the same people … what do you expect?

  7. DHP on May 25, 2010 7:17 am

    I am settling my mortgage as we speak and am horrified to find out that my payment amount each month was calculated at 5.99% when the bank prevailing rate at the time was 9.1%! This means I was underpaying a huge amount every month. Apparently the reason this was done was to get round lending criteria internally a smaller amount was easier to push through! Does anyone know anyone at The Central Bank to contact, is there an ombudsman? Wishful thinking?

  8. tariq sheshani on September 5, 2010 8:12 pm

    world would be better place without banks , banks are evil


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