RBS to Charge Monthly Fee on Credit Cards

DUBAI - Royal Bank of Scotland (RBS) will become the first bank in the UAE to introduce a monthly maintenance fee on its credit cards, while other banks may consider a similar move in future.



By Abdul Basit

Published: Mon 28 Dec 2009, 11:28 PM

Last updated: Thu 2 Apr 2015, 3:51 AM

Banks in the country are facing challenging conditions due to the global credit crisis and 2009 was a very tough year for banks like in other parts of the world. They are reviewing different strategies to increase earnings.

“In the current market conditions for us to continue to offer you .... great benefits and ensure that you enjoy the highest value with your credit cards, we will be charging a nominal monthly maintenance fee of Dh10 starting from February 1, 2010,” RBS, represented by ABN Amro N.V. in the UAE, said in a written communiqué to its credit card holders.

“Despite this fee, our credit cards remain amongst the most competitively priced cards in the market, while our interest rates remain at par with most other credit cards,” Karim Beg, Head of Consumer Finance and Marketing of the bank, said in an e-mailed statement to Khaleej Times.

Beg said that the monthly maintenance fee differs from an annual service charge in only one way — it offers greater flexibility for customers. An annual fee essentially ties a customer down by paying a lumpsum up front for a full 12 month period.

“We are charging a fee monthly so the customer pays only for the months they wish to keep the card. None of their money is wasted. Our monthly maintenance fee of Dh10, which equates to an annual charge of Dh120, is far lower than the annual fees being charged by other banks, that start at Dh150 and can go as high as Dh1,000,” he said.

Most of the banks Khaleej Times contacted said that they don’t have any plan to introduce new fees or charges on credit cards, but it is not out of the question.

“We don’t charge any annual fee on our credit cards, but we are reviewing different options. If we go for any tie-up for co-brand cards, we will take a decision accordingly,” Zahir Khurshid, Head of Product Development of Dubai Bank, told Khaleej Times.

All the banks, operating in the country, are charging an annual fee on co-brand cards against which they provide some benefits to customers in the shape of the air miles, free talk time and free air tickets. Recently Mashreqbank and Air Arabia launched a co-brand card with an annual fee of Dh100 to Dh200.

“Rakbank has no plans to introduce new fees or rates on any of its debit and credit cards in the next year. The bank will continue to offer its card customers the advantages of ‘Free for Life’ or ‘No Annual Fee – Ever’, a feature which it introduced in the market some years ago,” said David Martin, Head of Strategic Planning and Business Advisor, Rakbank.

The bank will continue over the next year to enhance the benefits that come with its debit and credit cards and these will be announced to customers in due course, Martin said.

Banks charge the highest monthly interest rates on credit cards against the retail purchases and cash advance. These rates reach up to 36 per cent per annum.

Citibank spokesman also denied introduction of any new fee on its credit cards. The bank offers five different types of cards and charge an annual membership fee, which ranges from Dh300 to Dh3,000.

abdulbasit@khaleejtimes.com


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