Central Bank to cap interest on credit cards

Dubai: The UAE Central Bank is finalising rules that would cap the interest rate banks charge on credit cards at 18 per cent annually to curb bad loans, according to sources.

The new rules are expected to come into effect this month, but the Central Bank officials did not respond to requests for more information.

Banks in the UAE charge between 27 per cent and 36 per cent a year. The rate stands at 18 per cent in Qatar and Kuwait, while lenders in Saudi Arabia charge between 19 per cent and 24 per cent.

Adel Yousuf Al Attar, a frequent credit card user living in Dubai, regards a cap of 18 per cent as a positive improvement.

"Considering how the UAE has established itself globally, 18 per cent is good enough. Lowering it would be better for us, but it depends on how much banks are willing to lose because even they need to make profits. The cap needs to be good for people and the banks. The equation should be balanced to help the country's economy overall."

— With additional inputs by Noor Al Khatib/Social Media Editor