How to find the right bank account for you? Here is a guide to the different kinds of banking accounts.

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How to find the right bank account for you?

Current, Savings or Fixed Deposit account: Based on what you need a bank account for, you can refine your search criteria. Are you looking for a bank account to transfer your salary to and make payments for all your utility bills, rent and so on? In this case, you need to take a current account that comes with a checkbook. Or are you looking to put some money on the side and earn interest while still having the flexibility to access it at any time? In that case, a savings account is what you should be looking for – you also need to consider whether you want a regular savings account or an e-savings account. As for long-term savings with higher returns, fixed deposits will do the trick but you need to be sure you won’t need to access that money for the tenure you set – whether in weeks, months or years.

Minimum balance or deposit required: How much do you need to deposit or maintain in your bank account on a monthly basis? Most banks have a minimum deposit requirement and, if you do not maintain it for that month, you are charged a fee. In the UAE however, this requirement is usually waived if your employer is listed or if you personally have a loan with the bank. [Related: Why your company’s creditworthiness counts for you]

Interest rates: The general rule of bank accounts is that current accounts do not offer any interest on the amount you deposit, while savings accounts and fixed deposits do. However, there is an exception to this rule – premium accounts, which usually require a large salary to be transferred into the account or a large deposit to be maintained.

Are you looking to save your money in a different currency? The majority of banks will offer you the option to open a bank account in other currencies, mainly in the three main currencies – US dollars (USD), euros or British pounds sterling (GBP). A few others also offer Japanese yen (JPY), Swiss francs (CHF), Canadian dollars (CAD) etc. It is worth noting that currency accounts come with some restrictions as well, such as how you withdraw your funds; some banks will only let you to withdraw funds by visiting the branch. There will be fees when you withdraw cash or make a deposit.

Offshore banking: The term ‘offshore’ originated from the Channel Islands being offshore from the United Kingdom. While many offshore banks are located on islands, this is by no mean compulsory. These days the term is used figuratively in respect of locations such as Luxembourg, Andorra or Switzerland as well as the Cayman Islands. Technically it can be anywhere outside of a home country or where you are currently resident. [Related: The benefits of offshore banking for expats]

Other fees and charges: What are all the other charges applicable on the account? Do you pay for a second checkbook or even to withdraw cash from an ATM that is not your bank’s ATM? Make sure you are aware of the administrative fees that are associated with your bank account. These fees can include ATM withdrawal from a bank, transfer fees to another bank account and standing order fees.

Rewards: While this is not a common feature for bank accounts as with credit cards, it is a growing trend. The rewards can be points for any amount you deposit into your account, for salary transfers you make or utility bill payments; these points can then be redeemed for shopping vouchers, a waiver of fees and charges on other finance products you hold with the bank. Some banks offer you the chance to win big prizes as part of a weekly, monthly or quarterly draw. [Related: Prize-linked savings account – a more exciting way to save]

Premium accounts: You might ask yourself, what is a premium account and is it not the same as a regular current account? Well, yes and no. It is the same, in the sense that it offers you a debit card, checkbook, ability to withdraw and deposit. A premium or premier account generally requires you to be a high-income earner or have a significant minimum balance on your account. Premium accounts will have a relationship manager to help you with your banking needs ; a free premium debit and credit card generally accompanies the account. [Related: Is a premier/ premium bank account for you?]

Islamic or conventional: Are you looking for a current, savings or fixed deposit account that is Sharia-compliant? You can choose to opt to see only the Islamic products and the list of Islamic bank accounts will appear in your search results. [Related: How do Islamic bank accounts work?]

Current accounts

A current account  is a banking account from which money can be withdrawn without notice, and allows you to make day-to-day banking transactions – paying money in, withdrawing cash from an ATM with a debit card, writing and paying by check and setting up standing orders and direct debits to cover recurring expenses such as utility bills. Few offer any interest.

Two people, such as spouses, can set up a joint current account to allow either signatory to operate it. But beware – they can be frozen under Islamic law if one partner dies. [Related: Should you have a joint account in the UAE?]

You can often organize an overdraft facility with your bank to go overdrawn beyond your account balance to an agreed amount. Such facilities often come with steep fees – and the fees are even higher if you are unauthorized by your bank when you go into the red and beyond the balance or overdraft limit.

Direct debits are starting to come in in the UAE, which are preferable to post-dated checks against loans. Be careful not to bounce checks; it will not only cost you in fees and affect your credit score but is illegal in the UAE.

When choosing a bank, be aware that in the UAE local banks tend to have more branches than international banks, which have more customer service centers, which can do administrative paperwork but do not handle cash. Check where your bank’s branches are.


Savings accounts

With interest rates at the levels they are today, you are not going to make a huge return storing your money this way. However, it’s certainly a better option than stashing it under the mattress and you can get your hands on the money whenever you need it… which is the whole point of an emergency fund: it needs to be instantly accessible.

A regular savings account  will have a lower interest rate but no restrictions on how many times you withdraw funds. An e-savings account offers you higher returns on your money but can only be accessed through online banking and would have certain limitations – e.g. if you withdraw more than once a month, the interest for that month is forfeited.

But there are deals to be had if you shop around for the best rates, particularly if you are going to leave a hefty minimum balance in there. [Related: How best to invest AED 100,000Five places to keep your emergency savings]

You may also want to consider prize-linked savings accounts that come with big cash prizes. Under these schemes, you can recoup your deposit and, the more you save, the better the odds of winning. The downside is that, if you don’t win, you won’t earn any interest or profit on the account, as prize-linked accounts generally come with zero percent interest. Plus you can be stung with an early encashment fee if you claim the deposit back within a certain period of time, so make sure you only invest cash you don’t need for some time. [Related: How good are National Bonds for my savings?]

Fixed deposit accounts

For those looking for a low-risk, short-term place to store their savings, fixed deposits still have some value – after all this is the best savings rate a bank can offer you, even if it is often low these days.

You are not going to make a lot of money but your money will be safe and you will make a return – admittedly not a big one.

You can get fixed-deposit accounts with terms from three months up to five years. Typically, once the deposit is made, you cannot add to the amount you have deposited or make any withdrawals before your term is completed – hence the term ‘fixed deposit’.

While some banks will allow penalty-free withdrawals, others could penalize you, with some penalties as high as 15 percent of the interest rate applicable for the period the fixed deposit has been maintained. The idea of the penalty is to encourage you to leave your money untouched.

If you decide to lock your money into an account with a longer term, while the interest rates may seem good now, they may always get even better… then you would end up stuck with a lower rate than you could have enjoyed. But, as with any investment or savings plan, that is the risk you take.

Children’s accounts

Children’s saving or juvenile accounts are a good way for parents to put money away for their children’s education and future, but are also a great way to help teach children financial literacy.

Understanding the significance of money teaches a child how society functions; the elements associated with expenses such as clothes, books, food, schooling, extra-curricular activities, gadgets and vacations.

[Related:Teach your children how to save early in the UAE | 10 ways to teach your teenager financial literacy]

Ladies’ accounts

Women-only banking is a growing phenomenon in the Middle East, particularly Saudi Arabia, with not just separating queuing, areas or ladies-only branches but specific products and services for women.

In the UAE, there are a handful of ladies’ accounts, which come with special personal finance rates or shopping discounts. However, with such a large expatriate population, this service is generally found in Islamic banks. Often women will only notice they have been treated differently by the color of their debit card – which might be pink. [Related: Ladies first: Are banks doing enough for women?]

Premier accounts

If you want a more personalized style of banking, it might be worth upgrading to a premier, premium or elite account. To find out if you qualify, the first step is to check your salary slip. While premier bank accounts are not as hard to get as private bank accounts (which cater to millionaires and billionaires), there are still restrictions.

You either need a solid minimum balance – sometimes as high as AED 350,000 pa or more – or a higher minimum salary.

What are the benefits of having an elite account?

You will have a dedicated relationship manager with fewer clients to handle than a standard bank account relationship manager. This is because higher earners tend to have more complex financial needs, and therefore need more time devoted to their investments and general financial affairs.

There are also a number of other perks and lifestyle benefits, which can include airport lounge access, free meet-and-greet services at Dubai and Abu Dhabi airports, free golf sessions and more.

Perhaps the biggest benefit, however, is preferential rates on personal finance products. Some come with free overdrafts, free credit cards, free travel insurance and accounts that come in multiple currencies. You can also withdraw higher amounts from the cash point.

However, there are downsides:

You need to earn a big salary, so if you are only just above the threshold you should consider it carefully. This is because some premier accounts come with a monthly or annual fee. So while you might get more attention from the bank, you are paying for that attention.

Also the interest rate is the same as a standard account – so that large minimum balance will not be working for you as well as it might be in a savings or fixed deposit bank account.

The other thing to consider is that some people don’t use all the added extras that come with their premier account. So if they are treating their premier account like a standard account, they might as well ditch it and save on the annual fee.

[Related: Is a premier account for you?]