How your credit card get overdrawn in UAE?

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Every credit card has a “credit limit,” which is common knowledge. It refers to the maximum amount you can owe on your credit card. The credit card limit is determined by the credit card type that your bank offers you, which is dependent on your creditworthiness and income.

Have you ever wondered what happens when your credit limit is exceeded or when you make a large purchase that surpasses your credit limit? Is there a way to go beyond the limit if the bank allows it? No, that is not the case. Your credit card, unlike a bank account, does not have a “overdraft facility.”

Can you exceed your limit on your credit card?

If you go above your credit limit without first getting confirmation, you won’t have to worry about your credit card being refused. Having said that, only a few banks in the UAE allow consumers to go above their credit limit up to a specific degree.

Some of these institutions, on the other hand, set the maximum overdraft limit at 5% of the existing limit.

These could be the reasons for your credit card overdraft. You should make a larger purchase or conduct another transaction that allows you to go above your credit card limit.

Banks in the UAE have varied rules regarding overdraft credit card accounts. While some banks claim that this 5% over-limit feature is available to all customers, others claim that it is not. Some speculated that it would be decided on a case-by-case basis at the discretion of the bank. The bank considers a number of variables, including your creditworthiness, income, payment history for prior credit card bills, and how frequently you exceed the limit set for you. But major banks will decline your credit card when you use beyond its limit in any case.

Over limit charges

What is an over-limit fee on a credit card?

When you exceed the maximum balance, or limit, on your credit card, you will be charged an over-limit fee. This fee will be applied to the sum owed to your credit card company.

If you overdraw your credit card without paying the over-limit fees, it will be cancelled. Many credit card companies will provide this option, but using it can harm your credit score, which is bad for your financial situation. You can change your mind at any time if you want to limit the number of transactions (when you need it).

Here’s a List of Over limit fees charged by different banks in UAE :

Bank Name Overlimit fees
Emirates Islamic Bank AED 200 for each transaction that is above your credit limit.
ADCB AED 275 payable as a fee at the end of your billing cycle if you are overdrawn.
Dubai Islamic Bank AED 225 payable as a fee at the end of your billing cycle if you are overdrawn.

Impact of Going Over on Your Credit Limit

A credit card account that is over the limit will almost certainly have an influence on your credit report. Your credit score will suffer as a result of this. A credit card amount that is over the limit raises your credit utilization and may reduce your credit score. If you do not pay your debt down before your account statement closes, you will have your high utilization reported to AI Etihad credit bureau.

If you repeatedly exceed your credit card limit, it may indicate to your issuer that you are unable to properly manage the credit you have been given. Your bank will consider you a danger and may deny your credit card application. As a result, it is preferable not to exceed your credit limit. If you intend to make a large purchase that will exceed your available credit, first request a credit limit increase from your credit card issuer.

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