The interest and fees on credit cards in the UAE are not left solely to the bank's discretion; they are subject to a strict regulatory framework that sets mandatory maximum limits and prohibits imposing any fees beyond these limits without the approval of the Central Bank. According to the Banking Loans and Other Services for Individual Customers Regulation (Regulation No. 29 of 2011), banks cannot charge any commission, fee, or penalty not listed in the approved schedule without prior written consent from the Central Bank. Interest on your purchases is only calculated on the outstanding balance after the grace period for full repayment has expired. In this guide, we clarify the governing laws, your rights to disclosure and objection, the implications of default, and when you may need a lawyer.

What do we mean by credit card fees and interest?

Regulation 29/2011 defines a credit card as a plastic card linked to an electronic network that includes the holder's details and credit limit. The bank or financing company pays for the cardholder's purchases and cash withdrawals on their behalf, and the client repays the amount at the beginning of the following month or in installments as agreed after the allowed repayment period for the full balance has ended. Accordingly, the amounts that may be charged to the cardholder are divided between 'interest' on the unpaid balance and 'fees and commissions' for specific services or obligations.

Interest

2. What is the legal framework governing them in the UAE?

The subject is organized on two integrated levels: the central bank regulations as the specialized reference for banking services, and federal legislation as the general framework for benefits, obligations, and enforcement. The most important are:

3. Cardholder Rights: Disclosure, Monthly Statements, and Mandatory Ceilings

Regulation 29/2011 is based on the principle of transparency in the relationship between the bank and the customer, establishing a set of mandatory rights for the cardholder:

The fundamental governing rule for ceilings is Article (11/b): Fees, commissions, and deductions on outstanding card balances shall be according to the limits set in Annex (2), and banks may not impose any commission, fee, charge, or penalty outside the schedule without written approval from the central bank. The customer should remember that these ceilings are subject to periodic review and updates by subsequent decisions from the central bank's board of directors.

4. When is interest calculated? And when are fees imposed?

Article (6) of Regulation 29/2011 clarified the method of calculating interest on the card: Interest is only calculated on the outstanding balance after the due date for full payment, i.e., in the month following the month of purchases and withdrawals. The regulation also prohibited deducting a percentage of the loan in advance as interest and required calculation on the declining balance. Furthermore, the Commercial Transactions Law (Article 88) prohibits claiming compound interest, i.e., interest on accrued interest.

50% Rule and Repayment Capacity

In order to ensure responsible lending, Article (7) of Regulation 29/2011 stipulates that monthly deductions from the borrower's salary or regular income — for all loans and facilities combined, including credit card facilities — must not exceed 50% of the total salary. Upon reaching retirement age, the debt must be scheduled so that the deduction does not exceed 30% of the income or retirement salary. The bank is also prohibited from taking guarantee checks exceeding 120% of the loan amount or outstanding balance.

Default in Payment: Legal Consequences

Defaulting on the credit card balance results in multiple legal consequences governed by more than one legislation:

7. How to contest incorrect fees or interest?

If you notice a fee or interest that you believe is incorrect, the principle is that any fee outside the approved schedule without the Central Bank's approval is considered a violation of Article (11) of Regulation 29/2011. The steps to contest are as follows:

8. When do you need a lawyer?

Some situations require specialized legal advice to protect your position, as administrative correspondence alone is insufficient when issues intertwine or collection procedures escalate. The need for a lawyer becomes particularly evident in the following cases:

9. Legal References

Frequently Asked Questions

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