Withdrawing cash with a credit card is expensive Image Credit: Illustrative purpose

DUBAI Out of cash and faced with an emergency? Believe it or not, many in such circumstances turn to the UAE’s shops and small time businesses rather than banks. Reason: Quick cash at a fraction of what they would pay a bank.

Last October when Kunal Nayyar, 26, had to urgently send home Rs50,000 (Dh2,900) for his father’s cataract surgery, he had no choice but to go to a Karama merchant who, his friends told him, gave out cash for a swipe of the credit card at his shop. “I needed cash urgently. When I called the banks, they said they would take at least 48 hours to process the money and withdrawing cash with a credit card was terribly expensive,” says Nayyar, a customer care executive who paid a one-time four per cent charge or Dh116 to the shopowner – an amount less than ATM withdrawal charges plus interest.

Experts call it a form of “credit card kiting” that lets one use plastic money to obtain cash and purchasing power one doesn’t necessarily have and many say it’s a practice on the rise among the country’s low to middle income expatriates.

“It’s convenient because it lets them not only circumvent legalities but also exorbitant rates the banks charge for an instant or short-term loan,” says Sanjiv, a relationship manager at a finance house.

“Another reason why it’s on the rise is that there are no laws in place that prohibit the practice. So you can’t quite technically deem it illegal even though you know it’s not a very scrupulous way of obtaining cash,” he adds.

Pakistani Arshad Qureshi, 39, says he has been resorting to “credit card kiting” even for non-urgent matters.

“That’s the best way out. I get into a financially tough situation anyway every three months when it’s time to pay the rent and last month I had to pay the school fees of my twins as well,” says Qureshi, an estimator at a Sharjah firm.

In April, when the school fees for his sons – both first graders – came up around the same time his rent was due, Qureshi swiped his credit card at a Rolla gold shop to take out Dh21,000, albeit over several mini transactions.

His total expense was a discounted one-time rate of three per cent or Dh620.

“The bank would have straight away charged me the same amount plus daily interest until I settled the amount,” said Qureshi, a resident of Sharjah’s Al Khan explaining why he hates going to banks to ask for quick loans.



1. Simply swipe the card over the debit/credit card reader at the Point of Sale (POS) of a shop that gives cash in exchange

2. Pay a ’one-time fee’ between 3 to 4 per cent of the amount swiped for

3. Convert the transaction in a three, six, nine, 12 or 24 month Easy Payment Plan (EPP) to further ease the burden

Cash advance on a typical UAE credit card:

1. Pay one-time cash advance charge of three per cent of the amount or Dh50 (whichever is higher)

2. 3.09 per cent per month flat rate additional charge


YOUSPEAK: Withdrawing cash with a credit card is expensive