How long a balance takes to clear at high local APRs, in AED.
Time to clear
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Total interest
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Total repaid
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Worked example
Take a balance of AED 30,000 at 39% a year with a fixed monthly payment of AED 2,000. The monthly rate is 39% over 12, which is 3.25%, so the first month’s interest is 3.25 percent of AED 30,000, or AED 975. Your AED 2,000 payment clears that interest and takes about AED 1,025 off the principal. Repeating month after month, the balance clears in about 21 months. Over that time you pay roughly AED 11,803 in interest, so you repay about AED 41,803 in total to clear AED 30,000 of debt. Paying more each month, or moving the balance to a lower-rate personal loan, cuts that interest sharply.
Step
Amount
How it is calculated
The calculator works month by month. Each month it adds interest at the monthly rate, the annual rate divided by twelve, then subtracts your fixed payment, and it counts the months until the balance reaches zero. Total interest is the sum of every month’s interest charge, and total repaid is the original balance plus that interest. Before it starts, it checks whether your payment exceeds the first month’s interest. If it does not, the balance never falls and the tool reports that the debt cannot clear at that payment, prompting you to pay more. UAE cards commonly charge monthly interest of around 3% to 3.5%, which is roughly 36% to 42% a year, so a payment only slightly above the minimum can leave a balance lingering for years.
Frequently asked questions
Why do UAE credit cards cost so much to carry?
UAE credit cards often charge monthly interest of around 3% to 3.5%, which is roughly 36% to 42% a year. If your payment barely exceeds the interest, almost nothing comes off the balance and the debt can take years to clear. Paying more than the minimum, or moving the balance to a lower-rate personal loan, dramatically cuts the total interest and the time to be debt free.
What is the UAE Central Bank minimum payment rule?
The Central Bank of the UAE requires card issuers to set a minimum monthly payment of at least 5% of the outstanding balance or AED 100, whichever is greater. Paying only this minimum keeps the account current but means interest compounds on the remaining balance month after month. Most financial advisers recommend paying at least two to three times the minimum to make meaningful progress on the principal.
Can I transfer a UAE credit card balance to a personal loan to save interest?
Yes. UAE banks offer personal loans at annual rates typically between 15% and 26%, which is well below the 36% to 42% charged on most credit cards. Consolidating a card balance into a personal loan at a lower rate reduces the monthly interest charge, meaning more of each payment reduces the principal. Before switching, check the personal loan processing fee and any early settlement charges on the card to confirm the net saving is worthwhile.
Does the UAE charge VAT on credit card interest?
No. Financial services that are margin-based, such as interest on loans and credit cards, are exempt from the UAE 5% VAT under Federal Decree-Law No. 8 of 2017. Fee-based services, such as annual card fees or foreign transaction fees, may be subject to VAT. The interest figure shown in this calculator therefore reflects the actual interest cost without an additional tax component.