“My bank charged me heavy fines for failing to pay a few cents”

I have a credit card with a local bank and have been quick to make payments each month. I always make sure to pay the full amount so as not to incur any fines or interest.

Recently, I analyzed my statements and realized that I had not paid a few sons each month of unpaid dues.

For example, if my credit card bill was Dh20,540.90, I forgot to pay the 90 fils. I continued to make such payments in error for months, forgetting to pay the minute amounts.

The bank charged me heavy fines and interest. On occasion, the penalties amounted to 500 Dh. Cumulatively, I now have to pay around Dhs 3,000 in penalties due to compound interest.

I refuse to make this payment because I have been a diligent customer. The bank refused to cancel this amount, despite negotiations.

I’m afraid this will affect my credit rating. Can you suggest my next course of action? SS, Dubai

Debt 1 panelist: Steve Cronin, founder of DeadSimpleSaving.com

This is what I call a “borderline case”, where a small mistake causes big problems and the bank may not even have clear guidelines for dealing with such a situation.

You say you paid the full amount due, but you didn’t. If the bank has a million credit card customers and each does not pay 90 fils, the bank receives 900,000 Dh less each month.

It’s unclear why the bank charged you hefty fines, as you say you paid a few fils (cents/pence) less than the total amount owed on your card for the month.

If it was a few fils less than your minimum payment, I could see why a fine would be charged for not making the minimum payment. You would clearly be wrong and would just have to pay.

But, as you describe, you should only pay interest on 90 fils each month. There’s no way it would snowball at 3,000 Dh.

Banks are usually happy for you to pay anything between the minimum payment and the card balance, as they can earn interest. As long as you don’t go over your card limit, they won’t charge fines.

If you’ve paid more than the minimum and haven’t reached the card’s balance limit, you have reason to make a “reasonable” mistake, which the bank would waive if they wanted to keep you as a customer. .

Try talking to someone more senior in the bank: go to the head office or ask to speak to a supervisor on the phone. Keep track of all interactions and most importantly, read all of your credit card terms and conditions. Tell the bank that you will report them to the UAE Central Bank.

If the bank refuses to help you 30 days after the complaint, you can contact the central bank’s consumer protection department through its website or 800 CBUAE. I can’t promise they’ll support you though, because they might find out you were wrong.

Make sure you have a bank account with another bank, so you don’t lose access to banking services if your relationship with that bank deteriorates further.

Debt Speaker 2: R Sivaram, Executive Vice President and Head of Retail Banking Products at Emirates NBD

I’m sorry to hear about your predicament – it’s frustrating to realize that charges were accumulating on your card for minute amounts that you missed paying.

Quite often people have small, unknown defaults and payments piling up on their credit cards that go unnoticed.

The cumulative effect of outstanding balances plus fees, interest and penalties causes the amount owed to increase very quickly and can negatively impact your Al Etihad Credit Bureau credit report.

As you will appreciate, on credit cards you are supposed to pay your dues in full on the due date without leaving any amount unpaid, even if it is only a small amount. If you do not pay the full amount, interest and other charges will begin to apply.

You should review your monthly statements as you receive them to understand any charges that may have accrued and try to settle them as soon as possible.

Given your situation, especially since you’ve only missed paying by a few threads, I recommend that you make an appointment in person with a senior bank official and explain your situation to them.

If you are an existing customer, you can ask them to waive the fees that have accrued so far. Continue to communicate with the bank. Keep track of all your correspondence now and in the future.

If the bank does not agree to waive the charge and you want to improve your credit score, the best thing to do would be to settle the outstanding Dh3,000 as soon as possible.

Debt 3 Panelist: Carol Glynn, Founder of Conscious Finance Coaching

As you pay the full balance due every month, less than just one dirham, it is very surprising to hear your penalties and compound interest are so high.

If you haven’t already, I suggest you check monthly that your payments left your bank account and were recorded on your credit card statement on the days you made the payment.

Create a document detailing all your payments on your credit card. This will come in handy when you dispute this with the bank. It would be helpful to list the amount owed according to your credit card statement and cross-reference it to the transaction by which you paid that amount owed, along with all relevant dates.

Could it be that you missed the deadline to pay your credit card bill each month? Even if you pay in full, if you miss the due date, the bank may charge you a late payment fine. Could this be what happened in your case?

It is important to reconcile the dates because the bank cannot charge you fines if you pay the minimum amount due on time.

As for the interest charged to you, it would only be on the outstanding balance. If you make full payment, leaving only a small amount of less than one dirham, the interest would only be a few fils per month. Could you have been charged interest on late payment fines?

I would suggest visiting a branch and asking to speak to a senior representative to discuss this. Bring all your documents to show your timely payments and ask them to explain how penalties and interest are calculated and applied.

This must comply with the terms and conditions of your credit card. Ask them to tell you where in the terms and conditions they explain this type of penalty and interest rate.

If you paid on time, you would have a case to dispute the late penalties. File a formal complaint through the bank’s complaints department. They will have 30 days to provide a satisfactory resolution, after which time if you are unhappy with their response, you can file a complaint with the UAE Central Bank.

If you missed your deadline each month for minimum payments, it is up to the bank to decide whether they will waive the penalties or impose them. Talking to someone within a branch is your best first step to negotiating this.

You can check your credit score by requesting your credit report on Al Etihad’s credit bureau website. I would suggest investing in getting this report so you can assess the impact on your credit score and take appropriate action to fix or improve it.

The Debt Panel is a weekly column to help readers manage their debts more effectively. If you have a question for the panel, write to [email protected]

Updated: June 01, 2022, 04:30

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