What is a Savings Account?
The government of every country encourages its citizens to open savings accounts in order to facilitate savings. Individuals can open savings accounts by depositing relatively small sums of money, and the funds deposited into the account can be withdrawn by the customer at any time he / she requires it. In return for their deposits, the customers will receive an interest rate which will keep growing until the account is closed or all funds therein are withdrawn. The current rate of interest offered to savings account customers at the moment is between 4% and 6%. The rate of interest will differ depending upon the sum of money maintained in the account, the scheme selected by the individual and the maturity age of the savings account. Even the present trends of banking policies affects the rate of interest.
Savings accounts are the accounts that let customers deposit a portion of their liquid assets while earning attractive monetary returns in the form of interest on the same. Almost all financial institutions and banks in UAE offer savings accounts with different features and benefits. Some savings accounts offered by the banks in UAE focus on earning interest while others focus on interest benefits from a particular feature such as Emirates NBD Manchester United Savings account which lets you earn higher interest every time your team scores a goal. Most of the savings accounts offered by these banks don’t require a minimum balance. Some of the banks in UAE implement Shariah banking rules for their savings accounts.
Types of Savings Accounts
- Regular Savings Accounts: Almost every bank offers regular savings accounts and the setting up process and maintenance of the accounts are fairly simple. Regular savings accounts are usually linked with directly with the customer’s checking account so that funds between the two accounts can be transferred with relative ease.
- Online Savings Accounts: Online savings accounts can only be accessed via the internet, or via phone in certain cases. Most online savings accounts do not require any minimum deposits, monthly maintenance charges or minimum daily balance requirements. This is an online-only account and the only currency with which it can be opened in most banks is AED.
- Money Market Deposit Accounts: Money market deposit accounts are growing in popularity thanks to the highly liquid nature and short maturity periods associated with securities. The safety of investment instruments through money market deposit accounts make it one of the quickly emerging options for customers across the globe.
- Certificates of Deposit: Certificates of deposit are basically savings instruments that entitle a bearer to earn interest. It works like a bond but the only difference is that the interest is paid to the bearer in a lump sum when the account matures as opposed to periodical interest payments.
Savings Account vs Fixed Deposits
Both savings accounts and fixed deposits (FD) are money-saving instruments, but they work in different ways. While savings account is great for salaried individuals and for regular transactions, fixed deposits are a better option for keeping the money safe for a longer term.
Money kept in savings accounts is liquid and useful for regular day-to-day transactions through debit cards and cheques. Fixed deposits, on the other hand, are not liquid. They are locked into an account for a specific period of time – from 1 month to over a year. If you want to withdraw the money deposited in an FD, you may have to pay extra charges as penalty.
Savings accounts in the UAE usually give you an average interest rate of 1.5-2 percent, fixed deposits come with higher interest rates of up to 4 percent. This means that money deposited in an FD gives you more returns at the time of maturity, while the money in savings account, because of regular transactions, lower interest rates and lack of tenure, do not get high returns.
Features and Benefits of Savings Accounts
Savings account offer several benefits to customers. Here we will take a look at the prominent features and most attractive benefits offered by the facility.
- The prime objective of the facility is to facilitate savings.
- There are no limits on the number of times you can make deposits or the amount of money that deposited into the account.
- There may be certain restrictions regarding withdrawals.
- Withdrawals can either be made through withdrawal slips or cheques.
- Savings accounts get a nominal rate of interest ranging up to 4%.
- There is a minimum amount that must be maintained in the account so that it is active.
- Regular household expenses and payments related to telephone bills or electricity bills can be made through E-Banking or Electronic Clearing System.
- EMIs related to car loans, personal loans, home loans, etc. can be paid via your savings bank account.
- These accounts can be opened in multiple currencies including AED and USD.
Documents Required to Open a Savings Account in the UAE
Any bank with which you wish to open a savings account will require to assess whether or not you possess the credentials required to qualify for a savings account with them. Following are the documents you must furnish when applying for a savings account.
- A fully filled-in account opening form
- Proof of identity (Any one of passport, driving license, or a national identity ca\rd such as Emirates ID)
- Proof of residence (Any one of passport, a utility bill issued within the past six months, or a recent bank statement)
- Passport-sized photograph of the account holder.
Savings Account Eligibility Criteria
To qualify for a savings account, applicants must meet the following eligibility criteria:
- Must either be a salaried employee or a self-employed individual.
- Must be a minimum of 18 years of age.
- Must be a citizen of the UAE, or a visitor to the UAE, or an expat working in the UAE with a valid visa can apply.
- There may be a minimum income requirement depending upon the specifications of the bank.
Savings Account Interest Rate
The highest interest rate offered for savings accounts in the UAE is up to 3%.
Top Savings Accounts in the UAE
Listed below are the top savings accounts offered by different banks and financial institutions in UAE.
ADCB Active Saver Account
Active Saver Account offered by ADCB is an online only account which can be opened only through ADCB online internet banking. The minimum amount required to open an account is AED 1,000. It offers a high interest rate which is calculated on daily balance. Only individuals can opt for this account, this account is not open for business purposes.
Emirates NBD Tiered Savings Account
Emirates NBD Tiered Savings Account offers high interest rates which depends on the daily balance maintained in the account. It is available in various currencies such as AED, SAR, USD and QAR. It offers a free international ATM card and debit card after the account is opened. UAE nationals, non-residents and GCC nationals are eligible for this account.
CBI Mabrook Savings Account
CBI Mabrook Savings Account is offered by Commercial Bank International of UAE. In CBI Mabrook Savings Account, the interest is applicable at 0.25% semi-annually and it offers one free debit card worldwide. A minimum balance of AED 500 has to be maintained in the account. Only residents of UAE are eligible for this plan.
HSBC Savings Account
The HSBC Savings Account offers the option of opening the account in multiple currencies. Some of the main features of the savings account is high withdrawal limit, free international debit card, multiple transactions and various other features.
DIB Savings Account (Shaatir Savings Account)
Shaatir Savings Account is a unique savings account offered by Dubai Islamic Bank (DIB). This account is specially designed for children. It offers higher benefits and doesn’t require a minimum balance. One can avail the ‘Shaatir Savings Box’, a free gift with the account.
NBQ Savings Account
NBQ Savings Account is offered by National Bank of Umm Al Qaiwain (NBQ). With this account, you can earn interest on your credit balance. The account can be opened in three major currencies, USD, GBP and AED. It has a savings scheme for children called ‘Alwan’.
NBAD Elite Gold Savings Account
This savings account offered by NBAD is meant to provide access to privileged banking services to account holders. There is no minimum balance that needs to be maintained in the account. The customer gets four free local fund transfers every month.
News about Savings Account in the UAE
More Residents of the UAE Keen on Savings Now
It would appear that more and more residents of the UAE are now displaying an interest in savings than before. In a survey that had been conducted earlier, in 2015, it was revealed that 21% of the respondents has said that they had no plans on savings at the moment. The survey had also revealed that of the expats working in the UAE, the two most likely to save were the Westerners and Asians at 48% and 44% each in contrast to the 28% of the UAE nations that were likely to save. Of all the respondents to the survey 84% were claimed to be financially stable. Over 60% said that said that they intended to increase their savings, 53% were UAE nationals.
11th April 2016