A number of banks operating in the country have agreed to reduce or cancel the rewards and benefits that they offer to dealers when using credit cards for various payments, in addition to imposing fees for the quick cash transfer service, which was previously provided for free, as of next October.
The list, which Emirates Today obtained a copy of, includes seven large banks that hold the largest shares of dealers in Abu Dhabi and Dubai, including five national banks and two foreign banks.
Credit cards are one of the most important banking products for banks, due to the high interest rate on them, which ranges between 3.25 and 3.5% per month, or between 39 and 42% annually.
Banks have been competing in the recent period to market credit cards, as they only ask the customer for a bank account statement for the last two months, and a copy of official documents such as a passport and Emirates ID, at a time when the salary transfer is not required.
Banking expert Tamer Abu Bakr told Emirates Today that banks used to grant credit card holders benefits, rewards and points that could be exchanged in restaurants or retail stores, in addition to entering distinct lounges at airports.
He added that these benefits, points, miles, etc., are provided by the banks to the cardholder customer, as a kind of incentive to pay with the card, but in return it is a cost that the bank bears.
He continued: “Given market conditions, it is natural for these costly benefits to be canceled for banks,” stressing that over the past years, banks have supported credit card holders with these benefits, but the circumstances of the spread of the new Corona virus (Covid-19), It affected all sectors, and it is imperative that all institutions restructure their expenditures and operational costs.
The expansion of banks
Since the beginning of the reopening of economic activities, most of the banks operating in the country have expanded in promoting credit cards, due to the expansion of the promotion of credit cards, due to the general climate imposed by the new Corona virus.
And due to the existence of an open and competitive market among banks, the interest rate on credit cards was close and ranged between 3.2 and 3.5% per month, at a time when banks grant those with high salaries starting at 50 thousand dirhams credit cards without the need to present any papers.
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