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Abu Dhabi, UAETuesday 21 August 2018

The best high-interest savings accounts in the UAE

Depending on how long you want to lock in your money, there are rates of up to 4 per cent for savers looking for better returns on cash

Illustration by The National 
Illustration by The National 

As US interest rates rise and UAE banks pass this onto local savers, there is finally a reason to get excited about savings accounts again.

With global stock market growth likely to slow or even reverse over the next year or so, the balance may just be shifting in favour of holding cash once more.

Jon Richards, chief executive at UAE comparison site yallacompare, says some UAE savings accounts still pay less than 0.5 per cent, but your starting target should be at least 1 per cent and ideally more. “That still won’t generate massive interest, even if you’ve got a couple of hundred thousand dirhams stashed away, but it is better than nothing.”

The headline interest rate is not the only thing you need to look at when choosing a savings account, he says. “The best easy access savings accounts work almost the same as your current account, and won’t penalise you for slipping under a certain balance.”

You should get a more generous return from a fixed deposit scheme, where you lock your money away for a set period in return for a fixed rate of interest. “You may have to commit to saving a certain amount every month over a set period and in most cases, you won’t have access to your money until the term is completed.”

What you lose in flexibility, however, you gain in rewards. “You will generally get a much higher interest rate and most banks that offer these accounts also build in generous reward schemes," says Mr Richards.

Some offer monthly, quarterly and annual draws, with hundreds of customers winning every month, Mr Richards says. “Some prizes are immense, up to Dh1 million in cash. That may be a long shot but you also have a decent chance of smaller prizes, which typically range between Dh100 and Dh10,000.”

Ambareen Musa, founder and chief executive officer at UAE comparison site Souqalmal.com, says the average interest rate in the UAE is now 1.36 per cent and rising. "You can tap into this using a wide series of accounts, with tiered returns, different currencies, fixed or variable rates, and the chance to win lucky draws. There are some great deals out there, so start searching now.”

Some accounts pay you more as your balance increases, others actually pay less if you put in very large sums of money as they look to focus their rewards on smaller savers. So hunt around to find the best account for the amount of money you are looking to set aside.

Here are some of the best high interest savings accounts UAE, as recommended by Mr Richards and Ms Musa.

HSBC Term Deposit Account

Annual return: up to 1.75 per cent

The HSBC Term Deposit Account, available to those with HSBC current accounts, demands you save your money for a specified amount of time, Mr Richards says.

You can save over one, two, three, four, six, nine or 12 months and the longer your commit, the better the interest rate.

HSBC Premier customers who save up to Dh150,000 for one month can get an annualised interest rate of 0.25 per cent rising to 1.45 per cent over 12 months.

Save between Dh150,000 and Dh750,000 and these rates increase to 0.35 per cent over one month and 1.60 per cent over 12 months. On Dh750,000 or more, savers get a range from 0.45 per cent to 1.75 per cent.

HSBC Advance and Personal Banking customers get 20 basis points less, so the maximum is 1.73 per cent.

FAB's iSave Electronic Account

Annual return: up to 3 per cent a year

Ms Musa highlights this online account from First Abu Dhabi Bank that pays up to 3 per cent a year. “The interest rate structure is tiered, and linked to your account balance, with higher savings translating into higher interest rates," she says.

Savings rates up to Dh50,000 earn 0.50 per cent, rising in six tiers so that those with more than Dh500,000 get 2.25 per cent, with that 3 per cent top rate payable on balances above Dh5m.

The account can be opened instantly by existing FAB account holders, and there is no minimum balance requirement or restrictions on the number of withdrawals you can make, Ms Musa says.

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National Bonds myPlan

Annual return: up to 4 per cent

The National Bonds myPlan programme is a fixed-term deposit scheme where savers buy bonds running for a defined period of time.

Mr Richards says that National Bonds offers a series of savings options but myPlan is a winner because of how easy it is to start making your money work for you. “Essentially, you simply say how much you want to save every month and for how long, either 12, 24 or 36 months, and you get all your money plus profit, at the end of the term.”

You have no access to your cash throughout the term but this means the returns are much higher than on a standard savings account.

In 2017, returns range dfrom 1.28 per cent to 4 per cent, depending on which bond you bought, and the term. That top rate was paid on its Three Years Step Up Bonds.

CBD Now Save Now Account

Annual return: up to 1.75 per cent

This account offers the best of both worlds, providing flexibility on how you can access your savings, and a reasonable interest rate, Mr Richards says. “There are no restrictions, you can top up your savings or withdraw from the account whenever you want.”

The digital only bank pays an annual interest rate of 1.75 per cent on savings up to Dh500,000 for the first months. “This rate then drops to 1 per cent but that is still pretty good for a no-commitment savings account.”

Ms Musa says the account can be managed through a state-of-the-art mobile app that lets you set up and track your budget and there no minimum balance requirement. However, she says this account is much less attractive for those with larger balances, as the rate falls to just 0.1 per cent above Dh500,000.

Emirates NBD Smart S@ver Account

Annual return: up to 1.5 per cent

The Smart S@ver Account is another attractive offering for those who do not want to commit to a fixed-term deposit account, Mr Richards says. “There are no limitations on transactions, and there isn’t even a minimum balance requirement. Plus, you can set it up online really easily.”

These features usually come at the cost of a decent interest rate, but you will get a return of 1.5 per cent on balances between Dh25,000 and Dh 100,000. “Emirates NBD will also credit your account with the interest every month,” says Mr Richards.

Adib Ghina Savings Account

Annual return: up to 0.40 per cent

This account may not offer the most eye-catching interest rate, but it does offer other benefits, Mr Richards says. “You will be entered into a draw to win Dh3m every four months and Abu Dhabi Islamic Bank also hands out monthly prizes of Dh10,000 to 10 Ghina Savings Programme members. With easy access to your money, this is a solid all-round savings account.”

Standard Chartered XtraSaver Account

Annual return: up to 1 per cent

This straightforward savings account pays 1 per cent for the first two months on dirhams, or 0.8 per cent on dollars. This then jumps to 2 per cent (1.6 per cent for dollars). The XtraSaver account offers both online and mobile banking, as well as branch access. The minimum initial deposit of Dh3,000 or dollar equivalent, but with no minimum balance requirement after that. However, you will not earn interest in any month where you make more than one debit transaction, such as ATM withdrawals, standing orders, retail purchases or loan recoveries.

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Emirates Islamic e-Savings Account

Annual return: up to 2 per cent a year

Ms Musa says the Sharia-compliant bank account offers an expected profit rate of up to 2 per cent a year, on an account balance of between Dh5,000 and Dh 50,000. This falls to 1.3 per cent for balances from Dh50,000 to Dh3.5m, and 1 per cent for balances up to Dh25million. These returns are for dirhams savers and are lower on the US dollar version.

The e-Savings account is only available online. Again, there is no minimum balance requirement, and no limit on withdrawals, although withdrawals may impact the profit balance calculation.

She says that while traditional tiered-rate savings accounts increase the interest rate as the amount you save grows, a number in the UAE do the exact opposite, including this one. “They offer lower interest rates on the higher account balances, particularly many 'online-exclusive’ savings accounts, as they aim to attract a large number of average middle-income customers rather than a smaller number of very wealthy savers.”

ADCB Active Saver Account

Annual return: 1.5 per cent

This online-only account by ADCB is another tiered account that pays 1.5 per cent on balances between Dh10,000 and Dh500,000, and a maximum of 1.65 per cent between Dh2m and Dh10m (falling to 1 per cent above that). Customers also earn TouchPoints, the bank’s loyalty reward points, every time their balance increases by Dh1,000.

Existing ADCB customers can apply for the Active Saver account through the online banking portal and set it up instantly, Ms Musa says. “There is no minimum balance requirement, and there is also a Sharia-compliant variant available with ADCB Islamic Banking.”

This is another online account that reduces the interest on higher balances, again, to attract middle-income savers.

RAKBank F@st S@ver Account

Annual return: up to 1.75 per cent

This online account by RAKBank pays 1.75 per cent on balances up to Dh200,000. So, you would get, say, 1 per cent on balances between Dh2 million and Dh 5 million as again, the aim is to attract the middle-income market. US dollar savings rates are notably lower. There is no minimum balance requirement and no cap on the maximum account balance eligible for interest calculation.

Ms Musa says online savings accounts like this one tend to offer higher interest rates compared to conventional bank accounts, as their overheads are lower. “Most don’t issue cheque-books and debit cards, and they also charge a transaction fee for over-the-counter transactions.”

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