UAE Credit Card Fees: Small Mistakes That Can Cost You

A credit card can help you earn cashback, reward points, dining discounts and other benefits. But some of those rewards can quickly lose their value if you overlook the fees and charges attached to your card.

A missed payment, cash withdrawal or transaction that pushes your balance beyond the available credit limit can result in additional costs. If you continue carrying an unpaid balance, interest or finance charges can make the cost significantly higher.

Banks typically disclose these charges in documents such as the Key Facts Statement (KFS), card agreement and Schedule of Fees. Understanding these costs before using your credit card can help you avoid unnecessary charges.

In many cases, avoiding a fee can save you more money than earning additional reward points or cashback.

What Are the Most Common Credit Card Fees in the UAE?

Some of the credit card charges you should understand before using your card include:

• Late payment fees
• Interest or finance charges
• Cash advance fees
• Over-limit charges
• Foreign transaction and currency conversion fees
• Annual and supplementary card fees
• Card replacement and statement-related charges

The exact amount depends on your bank and card. The Central Bank of the UAE (CBUAE) also sets maximum limits for certain retail banking fees. For example, the current CBUAE fee schedule sets a maximum credit-card late-payment fee of AED 230.

Below are some of the situations that can lead to unexpected credit card costs.

1. Missing the Minimum Credit Card Payment

Your credit card statement will show a minimum amount due and a payment due date.

You do not necessarily have to repay the entire outstanding balance to meet the minimum payment requirement. However, you must pay at least the amount specified by your bank by the due date.

For example, if your statement says that the minimum payment due is AED 150 and you pay only AED 100, you have not met the required minimum payment.

The consequences can include a late-payment fee and, depending on your card terms, finance charges on the outstanding balance.

The CBUAE currently sets the maximum credit-card late-payment fee at AED 230, although the actual fee charged by your bank may be lower.

Tip: If you cannot pay the full statement balance, make sure you understand the minimum payment required and pay it before the due date.

For a more detailed explanation of how minimum payments work, see our guide on minimum payment due on credit cards in the UAE.

2. Carrying a Balance From One Month to the Next

Paying only the minimum amount can help you avoid being treated as late, but it does not mean the remaining balance is free of finance charges.

For eligible credit-card purchases, the CBUAE requires banks not to charge interest or finance fees on the outstanding balance when the new statement balance is paid in full by the payment due date, subject to the applicable rules and excluding cash advances. When you make only a partial payment, finance charges can apply to the outstanding balance according to the card's terms.

This is why a credit card can become expensive when a balance continues to roll over.

For example, suppose you have AED 10,000 outstanding and your card has a monthly interest rate of 3%. A simplified illustration would be AED 300 in interest for a month before considering the way the bank calculates interest and any other applicable charges.

The actual amount will depend on your card's interest calculation method, statement cycle, payments and terms.

The key point: paying the minimum is not the same as paying the balance in full.

3. Going Over Your Credit Limit

Your credit limit is the maximum amount of credit available to you under your card agreement.

You might assume that you cannot exceed it simply because you have stopped making new purchases. However, additional charges can sometimes appear on your account, such as:

• Interest or finance charges
• Annual fees
• Recurring subscriptions
• Other applicable card fees

These could reduce your available credit further.

The CBUAE requires financial institutions to disclose that transactions exceeding an authorised credit limit may be rejected and may incur fees.

Tip: Avoid using your credit card right up to its limit. Keeping some available credit can provide a buffer for recurring payments and other charges.

4. Taking Cash From Your Credit Card

Using a credit card to withdraw cash can be considerably more expensive than making a normal purchase.

A cash advance may involve:

• A cash advance fee
• Interest or finance charges
• Different interest-free-period treatment from regular purchases

Cash advances are specifically treated differently from normal retail purchases under CBUAE credit-card rules.

The exact cash advance fee and interest rate depend on your card.

For this reason, withdrawing cash from a credit card should generally be treated as a last-resort option rather than a normal way to access money.

What Is a Quasi-Cash Transaction?

A quasi-cash transaction is a transaction that may be treated more like obtaining cash than making an ordinary purchase.

Depending on the card issuer, payment network and merchant classification, certain transactions involving financial services, money transfers or digital-wallet-related transactions may receive different treatment.

This is one reason you should check your card's terms before assuming that every transaction will earn cashback or rewards in the same way as a normal purchase.

5. Foreign Transaction and Currency Conversion Fees

Using your UAE credit card outside the country or making a transaction in a foreign currency can involve additional charges.

Depending on the card, these may include:

• Foreign transaction fees
• Currency conversion charges
• Network or processing charges
• Dynamic currency conversion costs

The actual cost varies by card.

If you frequently travel or shop internationally, compare the foreign transaction terms before choosing a credit card.

This can be particularly important for frequent travellers because a small percentage fee applied repeatedly can add up over time.

What Happens When You Miss a Credit Card Payment in the UAE?

The consequences depend on how long the payment remains unpaid, the bank's policies and the terms of your credit agreement.

Shortly After the Due Date

The bank may contact you through SMS, email, telephone or other channels.

A late-payment fee may apply if you have not met the required payment by the due date.

The sooner you resolve the missed payment, the easier it is to prevent the balance from becoming more difficult to manage.

If the Payment Remains Overdue

An unpaid credit-card balance can continue to accumulate applicable charges.

Your payment history can also form part of your credit information. AECB states that credit reports include payment history and information about loans and credit cards.

This means consistently missing payments can have consequences beyond a single late fee.

If the Debt Continues to Remain Unpaid

If you continue to miss payments, the bank may take further collection or recovery action according to the agreement and applicable UAE laws and regulations.

The exact process depends on the circumstances.

If you are struggling to repay a credit card, contacting the bank early is generally more useful than ignoring payment reminders.

What Does the CBUAE Say About Credit Card Fees?

The Central Bank of the UAE requires financial institutions to provide consumers with clear information about the costs, fees, interest or profit rates, risks and consequences associated with credit products. A Key Facts Statement must also be provided before a credit product is provided.

For credit cards, the CBUAE also requires statements to separately disclose interest/profit rates, fees and other relevant information, including the cost of not paying the full outstanding balance by the due date.

Current CBUAE Credit Card Late-Payment Fee Cap

The CBUAE's current maximum-fee schedule lists:

Credit card late-payment fee: Maximum AED 230

This is a regulatory maximum, not a statement that every UAE bank charges AED 230. Your card's actual fee should be checked in its current Schedule of Fees or KFS.

What About VAT on Credit Card Fees?

VAT treatment can differ depending on the nature of the charge.

The UAE Federal Tax Authority's financial-services VAT guidance distinguishes between different types of financial charges. For example, its guidance identifies certain loan and credit-facility fees as standard-rated while treating delayed-payment penal interest charges differently.

Therefore, it is better not to assume that every credit-card fee has the same VAT treatment.

If a particular fee matters to you, check the bank's fee schedule and the amount actually shown on your statement.

5 Simple Ways to Avoid Unnecessary Credit Card Costs

1. Pay at Least the Required Minimum Before the Due Date

If you cannot pay the full balance, make sure you meet the minimum payment requirement by the due date.

However, remember that paying only the minimum can leave the remaining balance subject to applicable finance charges.

2. Prefer Paying the Full Statement Balance

If your finances allow it, paying the full statement balance by the due date can help you avoid interest or finance charges on eligible retail purchases under the applicable card terms.

This is often more valuable than trying to maximise a small amount of cashback.

3. Keep Some Room Below Your Credit Limit

Avoid running your credit card close to its maximum limit every month.

Leaving available credit can help prevent unexpected fees or declined transactions when recurring payments or other charges are posted.

4. Avoid Unnecessary Cash Advances

Credit-card cash withdrawals can carry additional fees and may not receive the same interest-free treatment as regular purchases.

If you need cash, compare the total cost of the available options before using a credit-card cash advance.

5. Set Up Automatic Payments

A Direct Debit or automatic payment can act as a backup if you forget a due date.

You can arrange an automatic payment for at least the minimum amount due, while continuing to pay the full statement balance when possible.

Also make sure the linked bank account has enough funds when the payment is scheduled.

How to Check Your Credit Card Fees Before Applying

Before applying for a UAE credit card, do not look only at the cashback, rewards or welcome offer.

Check these charges as well:

Takeaway

Credit-card rewards can be useful, but avoiding unnecessary fees is an equally important part of using a credit card wisely.

Before using a UAE credit card, understand your payment due date, minimum payment, interest or finance rate, cash advance charges, foreign transaction fees and any applicable over-limit charges.

If possible, pay your statement balance in full, keep some room below your credit limit and avoid unnecessary cash withdrawals.

Most importantly, do not choose a credit card based only on cashback, reward points or airport benefits. Look at the complete cost of the card.

A few minutes spent checking the fees before applying can potentially save much more than the value of the rewards you earn later.

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