Bounced cheques in the UAE trigger credit score damage and account closures
Bounced cheques in the UAE can lead to serious financial consequences. Banks are required to warn customers about the risks, which include fees, account closures, and damage to credit scores tracked by the Al Etihad Credit Bureau, making it harder to open new accounts or secure loans in the future.
When a cheque bounces, banks must notify the customer about possible penalties, which can range from extra charges to account closure depending on how often it happens. A third returned cheque may prompt a bank to shut down the account, though policies vary between institutions.
If four cheques bounce in a single year, the account could be closed for two years. A repeat offence within that period extends the closure to three years. The bank is not legally required to prove customer faultâclosure remains at their discretion.
Once an account is closed due to bounced cheques, the incident is reported to the Al Etihad Credit Bureau, lowering the customerâs credit score and making it difficult to open a new account elsewhere. Other banks will check this record when processing applications, often imposing restrictions or rejecting them outright.
Even if the closure isnât the customerâs direct fault, the record may still affect future banking. Some systems, similar to ChexSystems in other countries, flag closed accounts for 6-12 months, depending on local regulations and the reason for the closure.
The impact of bounced cheques extends beyond immediate fees. A damaged credit score can limit financial options for years. Customers facing account closure may struggle to access basic banking services until their record improves.
