The Debt Panel: ‘I cancelled my credit card insurance but the bank continued to charge me'

I had a credit card with a bank in the UAE for a number of years but when I changed my employment status to freelance, my problems started.

My first issue was with the card’s protection insurance, which was supposed to cover the outstanding amount if I lost my job. When I asked the bank if I was covered as a freelancer with an official trade licence, they said no, so I requested that the card insurance be cancelled.

I tried more than six times to cancel it, yet it kept appearing on my statement. I was paying more than Dh400 a month for insurance that did not cover me.

The bank claims that I never asked for the insurance to be cancelled, despite it being visible in my online banking communication. This money has never been refunded and the bank has refused to admit any fault.

As a new freelancer, I invested in my business and made some large purchases on the credit card, which I paid off immediately. I had some payment plans on the card, so I rang the bank and asked how much I needed to pay to make a full and final settlement, so I could change to a new credit card.

A member of staff provided the information over the phone and while still talking to them, I logged into my account online and made the full payment. The bank employee said it would take a couple of days to confirm but I never received confirmation that I had paid it off. I raised this issue with the bank but they said no clearance request had been made.

I then asked for the recording of the phone call, gave them the relevant dates and details but nothing happened. Instead, the bank said I never made the phone call. At the end of the month, I received my statement and it showed that I owed more than Dh20,000, despite having cleared the account in full. I raised a complaint but the bank’s collection department proceeded to call me more than 20 times a day to demand the money.

I filed three official complaints with the bank and requested a full audit of my credit card account. The bank refused my request, so I did my own audit and discovered that I had overpaid the card by Dh20,500. I provided this information to the bank and asked them to investigate but have not received an official response to any of my complaints.

I offered to settle the debt to resolve the issue but the bank refused the offer and has continued to charge extortionate interest rates, making the debt unserviceable.

I also raised three complaints with the UAE Central Bank but have yet to receive a reply. However, collection department employees continued to call me and shout at me to pay the money.

I have now received an email from the collection team saying that the debt is seriously overdue and that they will be looking to open a case against me. This is the first contact I have had from the bank in months. The debt now stands at Dh57,232. This has been going on for more than two years and I am concerned that, as a consumer, I have very few rights to resolve this. Can you advise me on what to do next? LR, Dubai

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

I am sorry to hear you have had all these problems when you have, according to your letter, tried to do everything right. In general, you should not try to raise business funds using a credit card as the rates are too high. One mistake or administrative failure and you have a large card balance to deal with.

Also, given the bank’s behaviour over the protection insurance, you should have not trusted them further as a credit card provider and not borrowed more on their card.

You have several lines of attack here, even if it sounds like you have already tried some of them. Before anything else, make sure you document every statement, every payment, every conversation and every date of interaction. In the case of disputed payments, you will need to show that the money actually left your account with that bank or another bank.

Have you tried going to the head office of the bank and meeting with someone in person? Ideally, you should either meet a senior loan officer or senior person in the collection department. You are more likely to make progress by meeting them rather than emailing or talking to them on the phone. If necessary, make it clear that you plan to report them to the UAE Central Bank and also file a court case against the bank, and you want to avoid this by meeting them – that should make you more of a priority.

If you have not had any success with the UAE Central Bank, try visiting a branch of its Consumer Protection Unit in Dubai and call 800 CBUAE to follow up with them.

You should also consult a lawyer to see if you have a valid case against the bank regarding the credit protection and the card payments.

Debt panellist 2: Carol Glynn, founder of Conscious Finance Coaching

What an extremely frustrating situation to be in. Insurance policies for credit cards are frequently charged without the customer's knowledge. I would recommend that customers do not take out these types of policies as the terms and conditions make it very difficult to make a claim. As you have told the bank to cancel the policy and they have ignored your request, I would advise you to continue persevering with the mis-sale of insurance on your list of complaints with the bank.

Payment plans on credit cards are also a common problem among banks in the UAE. As there are no documents provided, customers often do not fully understand the terms of the plans. They are frequently just as expensive as the interest charged on credit cards, which means that customers do not have the chance to make the savings they expect when they sign up for them.

If customers want to pay off these plans early, they need to arrange it with the bank. Transferring the outstanding amount to your credit card will not pay off the plan. The bank needs to designate the funds specifically to the plan in order to clear it. From the information you provided, I suspect this is what happened. The cash was paid to your credit card when your intention was for it to pay off the payment plan.

Collection departments can be extremely aggressive and I understand how stressful that is. My recommendation would be to detail every step of the situation and the steps you have taken to resolve it in one document.

Make a note of the names of people you spoke to, the dates on which you called and documents showing when you paid your credit card bill in full. You mention you have already reconciled your account. Include this reconciliation with relevant back-up for each transaction – for example, a debit transaction from your current account of the amount paid that was not reflected on your credit card.

Take these documents to your bank and arrange a meeting with a manager. Explain the situation to them and state that you will be escalating the issue to the UAE Central Bank's Consumer Protection Department if the issue is not resolved within 48 hours. Follow up this conversation with an email to the manager and the bank's complaint department.

There is a formal process you must follow to register a complaint with the UAE Central Bank, including providing evidence that you have given the bank 30 days to resolve the issue. From your letter, it sounds like you have this evidence and are ready to start this formal process.

If you have access to the funds, I would advise you to pay the balance in full. This is to stop the threatening phone calls and to prevent the balance from growing further. When the issue is resolved, you should receive a refund of any overpayment.

Make sure you do this in a branch and receive a receipt to prove this from a cashier.

It is important to take very quick action when issues arise with credit cards as the interest and fines accumulate and compound rapidly. Dealing with this for two years must be very difficult but I hope you can resolve it soon. Going forward, I advise you to keep your credit card bill lower than the amount of cash you have in the bank at all times – and always avoid premium protection insurance policies and credit card balance payment plans.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to pf@thenational.ae