Salary advance? Banks offer payday loans

Payday loans are common in Europe, America and Africa, and now UAE banks are offering them too. (Supplied)

Facing an emergency or temporary cash shortage? UAE banks are here to help – for a fee.

While some companies offer salary advance to employees going on vacation or in emergency situations, loan against salary credit facility is available from some UAE banks.

Banks like Dubai Islamic Bank and ADCB (Islamic Banking) are offering this facility to customers who have their salaries credited regularly to the bank.

Payday loans are common in Europe, America and Africa, and now UAE banks are offering them too.

“I have been regularly receiving SMS messages inquiring whether I am interested in taking my salary in advance from my bank account with a note that said terms and conditions apply. Since I did not know the terms and conditions, I did not opt for it, but some of my friends have availed this facility,” said an Islamic bank customer, whose salary is regularly credited to the account.

Dubai Islamic Bank has a scheme whereby customers who have their salaries transferred to the bank can avail an advance salary facility and withdraw up to 90 per cent of their monthly net salary.

DIB will charge Dh295 per transaction for salary in-advance amount of Dh1,000 to Dh 13,500 and for salary advance from Dh13,501 to Dh30,000, a service fee of Dh500 per transaction will be deducted.

The maximum salary advance will be about 90 per cent of the net salary, after deducting all other obligations from the salary account. The full Al Islami Salary in Advance amount will be recovered on receiving customers salary in the current account provided that it does not exceed the last day of the same month or the first date of the month that follows.

“Even though the advance salary facility is available every month, salaried customers who avail the facility have to return the full amount at the end of the month,” says the bank’s official page.

In the case of ADCB (Islamic Banking), the bank’s Islamic Privilege Club members are eligible for a salary advance facility of up to Dh20,000.

The bank offers salary advance facility to anyone having a current account and minimum salary of Dh12,000 per month. Dh100 is charged for opening the salary advance facility and Dh100 per year for renewing the facility, a customer service agent of ADCB said.

RAKBank, too, offers salary advance facilities for customers who have a minimum salary of Dh5,000 and the cost is Dh150 plus prevailing interest rates, with a minimum fee of Dh50.

The advance is repaid from the following month’s salary credited directly to the account. It is open to anyone having their salary transferred directly to RAK Bank, but the amount will be subject to credit approval and a charge will be made as per the bank’s service and price guide.