Late Payment, Over Limit and Cash Advance Charges, Priced in Dirhams

You missed a due date by two days, took cash out of an ATM once, and went slightly past your limit. Three small mistakes in one month can cost more than a full year of the rewards that card pays you.

Penalty charges on a UAE credit card sit in a document called the schedule of fees, or the key facts statement. Every bank publishes one, the amounts differ by bank and by card, and they are stated in dirhams. This piece explains what triggers each charge and how to read your own numbers, because quoting someone else's figures would only mislead you.

The three charges and what sets them off

| Charge | What triggers it | Where to find your amount |

| --- | --- | --- |

| Late payment | The minimum amount due is not received by the payment due date | Schedule of fees, usually a flat dirham amount |

| Over limit | The balance goes above your approved credit limit at any point in the cycle | Schedule of fees, usually a flat dirham amount |

| Cash advance | Cash withdrawn at an ATM or counter, plus quasi cash transactions | Schedule of fees, usually a percentage of the amount with a stated minimum |

Two details behind the table matter more than the amounts.

First, a late payment charge is triggered by the minimum due, not the full balance. Paying something is not the same as paying enough.

Second, a cash advance normally has no interest free period. Interest starts from the day of the withdrawal and runs until the balance is cleared, which is separate from the withdrawal fee itself. Quasi cash covers things people do not think of as cash: some money transfers, gaming and gambling transactions, buying foreign currency. Which transactions get coded this way is set by the merchant and the network.

A single bad month, stacked

Take one month with all three events. The costs land in this order:

• The cash advance fee, charged on the day of the withdrawal.
• Interest on that cash from day one, at the cash advance rate, which is often higher than the purchase rate.
• The over limit charge, if the fee itself pushed you past the limit, which happens more often than people expect.
• The late payment charge when the minimum is not received in time.
• Interest on the whole purchase balance, because a late or partial payment usually ends the interest free period on purchases too.

That last one is the expensive part and the least visible. One missed due date does not just cost the late fee. It removes the grace period, so purchases that would have cost nothing start accruing interest, and often keep doing so until the balance is cleared in full.

Add your card's late payment charge, its over limit charge and a typical cash advance fee together, then compare that to what your card paid you in rewards last year. For most people the bad month wins.

Reading your own schedule of fees

Open your bank's website and find the schedule of fees for your specific card, not the general product page. Write down five numbers:

• Late payment charge.
• Over limit charge.
• Cash advance fee, both the percentage and the minimum.
• Monthly interest rate on purchases.
• Monthly interest rate on cash advances.

Keep them somewhere you will see them, next to the break even spend you worked out for the annual fee. These are the numbers that decide whether your card is cheap or expensive, and none of them appear in the advertising.

How to avoid the whole category

Most of these charges are entirely avoidable with three habits.

Set up a direct debit for at least the minimum amount due, so a forgotten date never becomes a fee. Many people set it for the full statement balance and treat any manual payment as a top up.

Keep a gap between your usual balance and your credit limit, so that a fee or an exchange rate movement does not push you over. Monthly add on fees you can switch off quietly narrow that gap.

Treat the cash advance function as broken. If you need cash, use a debit card. If you regularly need cash on credit, a personal loan is usually priced lower than a card cash advance, though terms vary by bank and by borrower.

Charges, rates and calculation methods differ between issuers and change over time. Confirm every figure with your own bank before relying on it.