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I have spent Dh32,749 apart from Balance Transfer due of Dh1,348.94 in November 2013. I have paid Dh34,116 (Dh7,500 in November and Dh25,600 and cash back adjustment of Dh1,016 in December) before the due date. Still I was charged Dh1,455.98 as finance charges. When I checked, I was told that Dh7,500 paid in November was considered against Balance Transfer because the purchases were not yet reflected in the statement. When I was offered Balance Transfer, I was clearly told that all the payments will be considered against purchases first and only the excess will be considered as Balance Transfer due. I was under the impression that I have paid the amount against purchases and will settle the Balance Transfer amount when it is due.

I received a letter from RAK Bank, in which they apologised for the misinformation given by their staff. Even if the customer is given wrong information by their staff, and the customer has made the payment as per the information given by their staff, is it still the customer’s mistake?

They keep on insisting that I have paid before the statement date, hence the amount was considered for Balance Transfer, which is due by January 8, 2014. I have cleared this payment also by December 16, 2013. The bank wants to make money whichever way possible.

From Mr Mahadevan Prabhakar


Mr Ian Hodges, head of Personal Banking, RAK Bank, responds: Thank you for giving us an opportunity to justify our stance on the issues raised by Mr Mahadevan Prabhakar, RAK Bank customer.

Please note that Mr Prabhakar has availed of several promotional Balance Transfers with RAK Bank since May 2012 and was explained the payment allocation by our staff. In October 2013, the client availed of two additional promotional Balance Transfers on his Credit Card and the terms of the agreement were reiterated to him.

Mr Prabhakar made a prepayment on his Credit Card in his November 2013 statement cycle, which was offset against the promotional Balance Transfer outstanding. To further clarify, payments made are applied to billed transactions first and then only to unbilled transactions. In this case, when the customer made the prepayment, billed transactions included only the promotional Balance Transfer outstanding. As a result, the promotional Balance Transfer outstanding was partly settled, although the customer expectation may have been to settle the unbilled retail transactions.

Consequently, retail transactions included in the customer’s November 2013 Credit Card statement was not paid in full by the due date leading to Finance Charges being levied in his December 2013 statement. Prior to the receipt of your e-mail, we have informed Mr Prabhakar on the reason for the Finance Charges levied in writing.

Further, in our letter to the customer dated January 22, we have apologised to him for the misinformation provided by our staff on January 4. However, since the Finance Charges were levied (December 2013) prior to the misinformation by our staff (January 2014), we are unable to accede to the client’s request for reversal of the charges.

Mr Prabhakar responds: Thanks a lot for your co-operation. I have gone through the letter sent by RAK Bank. I have two points to clarify.

First, they have mentioned that they have apologised only for the misinformation given by their staff on January 4. I was given the same information even prior to the 4th and when I was taking the Balance Transfer facility from the beginning. I had given two landline numbers of RAK Bank from which I was given the same information of payment consideration to the person who was handling my complaint. He informed me that he cannot take out the old records. Hence, to prove my case, I had taken a Balance Transfer again on the 4th, who has informed me the sequence of my payment consideration. Also even on January 23, I was told the same information by their staff, as mentioned below.

1) First priority for Finance Charges

2) Then for balance transfer availed with 1.5 per cent interest

3) Then to retail purchase

4) Then to zero per cent Balance Transfers

Please note that I have availed only zero per cent Balance Transfer and all their staff are still informing the customers that if it is 0 per cent Balance Transfer, they will consider only 3 per cent minimum payment for the first three months and the payments would be taken towards retail purchase.

Second, they have mentioned that in November statement cycle, payment made is applied to billed transactions. I have made two purchases on October 20 for Dh30,250 and I made a advance payment of Dh3,000 on November 12 and Dh3,500 on November 13. By this time, the purchases were reflecting when I checked through Net Banking. Also on the statement dated November 14, both Balance Transfer balance and purchased amount were reflecting in my Credit Card account. Then, why should they consider my payment towards Balance Transfer, which is due on January 8.

I have consulted my chartered accountant also and he has the same opinion that the bank has levied the finance charges wrongly.

From the above, there is a clear misunderstanding from both the parties. The bank should have reversed the finance charges, after considering my payment history.

Mr Hodges responds: Please note that the payment allocation by Mr Prabhakar in the email of January 29 is in sync with our Credit Card agreement, details of which are also available on our website www.rakbank.ae for customers’ reference. The zero per cent Balance Transfer provides a facility to the customer to avoid any charges on the Balance Transfer subject to minimum payments being received every month. However, it does not waive any interest towards other transactions performed by the Cardholder.

To clarify the second concern raised by the client, transactions are billed to customers only on the statement date, which in Mr Prabhakar’s case is the fourteenth of every month. We wish to reiterate that the payments made by the client in November statement cycle were allocated against the billed Balance Transfers as per the payment allocation hierarchy.

In view of the above, we are unable to accede to the client’s request for reversal of Finance Charges levied on his Credit Card.