“I didn’t activate a credit card, but I was charged an annual fee”

In the third quarter of 2019, I took out a credit card with a local bank. At the time, the bank agent assured me that the card had no annual fee.

However, after receiving the card and reading the attached information, I found out that the card charges an annual fee of Dh200. Therefore, I did not activate the card and never used it.

I recently received monthly statements by email from the bank and when I called them I was surprised to find that I owed over Dh2000 ($544.58) on the card.

The bank agent said he had canceled the card on my behalf, but it would take 45 days and someone from the payments department would call me.

However, I haven’t heard of them yet. Obviously, the longer this drags on, the more the penalties will increase and the amount owed will increase rapidly.

Additionally, I was also flagged as defaulter on my Al Etihad Credit Bureau credit report. I discovered this when I applied for a loan, which was consequently rejected.

Can you advise me on what I should do and what my legal rights are regarding this issue? LB, Dubai

Debt Speaker 1: Sameh Awadallah, Acting Global Head of Retail Banking at Islamic Bank Abu Dhabi

Your decision not to activate your credit card and not use it is not the solution, as it may result in you paying charges without enjoying your cardholder’s benefits.

Your account is automatically opened when your application is approved. This means that even if you do not activate the credit card, you will still have to pay the annual fee associated with it.

Given your situation, I would recommend arranging a face-to-face meeting with a senior bank official and explaining your situation. As this is not a huge amount and if you are an existing customer of the bank, you can ask them to waive the annual fees that have accrued so far.

You could then ask to switch to another card from the same issuer that does not charge an annual fee. It may be less hassle for you than canceling your card and applying for a new one from a different issuer.

Once the settlement is complete, ask the bank to remove the default status and change the original credit information provided to the AECB.

The bank can correct and update its records instantly using the data correction tool provided by the AECB.

There is a link on the AECB website that allows you to contact your bank (information provider). If you can convince the bank to do so, make sure the agreement is in writing.

I also suggest obtaining both the authorization letter and the written agreement, on bank letterhead, to change the delisting status.

Debt 2 Panelist: Jaya Ratnani, Managing Partner at Freed Financial Services

Quite often people have small, unknown defaults and payments piling up on their credit cards, which go unnoticed over a period of time. This amount increases due to penalties and interest and can negatively impact an AECB credit report.

It is frustrating to be refused a loan from a bank for such a reason. The cancellation of the credit card and the non-cancellation of the annual fees charged by the bank can be due either to a system error or to a bad internal communication of the services of the bank.

The first step is to resolve this issue by contacting the bank and requesting a waiver of all fees.

In the event of inaction by the bank, a complaint can be lodged via its online complaints portal or by e-mail. Attach any supporting documentation to prove your argument should be submitted at this stage.

It may have been a one-year promotional offer that the bank offered to encourage people to sign up for the credit card.

Alison Soltani, Founder of Leap Savvy Savers

If the bank takes no action for the next 30 days, you can file a complaint with the UAE Central Bank through its website. You will need to attach the supporting documents and the reference number of the complaint from your bank.

Once the matter has been resolved with the bank, ask for a disclaimer letter. The bank must notify the AECB in its monthly report of the closure of the card. When the AECB receives corrected data, it will update your credit file, which will result in a change in your credit score.

Be sure to review your AECB credit score after 30-45 days to ensure the default has been removed and the score is updated.

In the meantime, if you are applying for a loan, you can provide the bank with justification for these charges and the credit assessment team can review your case for approval.

Alternatively, you can wait for the AECB report to reflect the account closure and reapply for the loan.

Debt 3 Panelist: Alison Soltani, Founder of Leap savvy savers

I’m sorry to hear about your predicament – it’s frustrating to realize that charges were accumulating, without your knowledge, on a credit card you weren’t using.

This may have been a one-year promotional offer the bank was offering to encourage people to sign up for the credit card, and they may not have explicitly confirmed that the charge would be applied. after the expiration of the offer period.

It is worth asking all agents, companies, financial institutions or banks to outline in writing all fees associated with their financial products before signing up.

Although you have not activated the card, you are still liable for the fee unless you cancel it with the bank.

The 2,000 Dh will, in all likelihood, be the annual fee plus accrued interest and late fees on the account. This will definitely affect your credit score and is likely the reason your loan application was rejected.

You can complain about the agent — for not informing you of the charges — to the bank’s relationship manager and to the central bank by filling out the form on their website or by calling 800 22 823.

It may help your case if you have written evidence, such as a message or email, that suggests the credit card did not incur a charge.

Unfortunately, if the interactions were verbal only, your complaint may not succeed because the bank sent you documents with the card, which informed you of the charges. I would also check to see if the fees are listed in the documents you signed when you applied for the card.

If you want to improve your credit score, however frustrating it may be, the best thing to do would be to clear the Dh2000 charge as soon as possible. Although your score will immediately reflect this, it will take time to recover to a point where you can claim credit.

In the meantime, there are steps you can take to speed up improving your credit score.

Make sure all bills, fees, and loan payments are made on time. Also limit the number of accounts, cards and loan applications you make in a short period of time.

Also, do not use the maximum amount of any existing credit you have. For example, if you have a credit card with a limit of 10,000 Dh, it will be to your advantage to use 3,000 Dh to 4,000 Dh per month and pay it back in full.

You can also apply to become an authorized user on a tax-responsible partner’s card, which will also have a positive impact on your credit report.

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: May 25, 2022, 5:00 a.m.

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