The UAE has over 50 banks with more than 800 branches and is considered one of the most competitive banking markets in the region. Interestingly enough, even in such a market – where one would think that customer service would be a great differentiator – the perception of service is incredibly low.
So why not switch banks? Switching is not the easiest process, as we all know. Therefore, before you do so, it might be wise to raise a complaint with your existing bank. Giving feedback to a failing bank is wise as it may help it raise its game and, if you are lucky, encourage it to fight to keep you as a customer.
If, however, your experience has been too stressful, starting again with a fresh bank could also be a good move. Once decided, consider the following steps.
What do you want from your new bank?
Before you make any switch, be sure the bank you are moving to will solve your financial woes. We compare over 100 bank accounts from UAE banks by comparing all the services they offer. Things to consider include the quality of their online service, any charges levied on the account, whether you want an Islamic or conventional account or the minimum balance required. To get a feel for a bank you are considering joining, simply walk into the nearest branch and judge the service for yourself.
- Is the nearest branch in a convenient and accessible location?
- Were your queries handled efficiently and effectively?
- Did you have to wait in a long queue?
All these factors, as well as the benefits that come with any account you may open, should help you find the best bank for you.
Do you have existing loans with your existing bank?
Do you have a personal loan, car loan or mortgage with your existing bank? And what about your credit card – is it paid off every month or is there an outstanding balance? Any debts with your existing bank will have to be paid off – particularly if the loans you have with the bank stipulate that your salary must be transferred into that financial institution. To make the switch easily, pay off the outstanding balances on any loans or credit cards first.
If you cannot afford to pay off the debt, then you need to find a bank that will accept to refinance your debt. This means that when you switch to a new bank, you also need to find a good personal loan to go with your new current account. You can compare personal loans available in the UAE to find out something close to the one you currently have. You don’t want to take on a new personal loan which is more expensive, and don’t forget that, when you pay off your existing loan, in most cases you will have to pay the early settlement fees.
Debts with other banks
If you have a loan with another bank, you may have written a number of cheques to that bank to cover the monthly repayments. Make sure you alert the lender that you plan to switch accounts and that you will issue a new set of cheques. To make the process easier, you might be able to take advantage of the new Direct Debit system that launched in the UAE in 2013. This would avoid writing out dozens of cheques again. Just be honest with the lender about the account switch and ask them what they need from you – you don’t want to get hit with any late repayment charges.
Make sure your new bank wants you
Before you head off to your new financial institution all guns blazing, make sure you meet all the criteria required. You may find you don’t earn enough to qualify for the account of your choice or that your nationality is an issue. For example, some banks in the UAE no longer allow United States citizens to open accounts with them because of US tax regulations that force banks to report any bank accounts held by US citizens to the US tax authority to ensure they do not evade taxes. This applies to non-US banks and, as a result, some banks do not consider it economically viable to retain accounts for Americans because of the added reporting costs.
The other element to consider is whether or not your chosen bank has a relationship with the company you work for. Some banks will only allow employees of certain companies to have accounts with them, so check first.
Get your paperwork in order
Once you’ve decided on the bank you want to join, gather the documentation together. To open a standard account, you need copies of your passport, residency visa and Emirates ID, as well as a salary certificate from your employer.
Your new bank may want to see previous bank statements from your old bank – this particularly applies if you have any liabilities.
If you want your new bank to take over your liabilities you will need to request a “liability letter” from your old bank. The new bank will then issue any loan to you – once approved, of course – so that you can pay off the debts at your old bank. You will then have to request a “no liability” letter from your old bank to prove that all outstanding debts have now been cleared.
You are now ready to close your account. It is wise to keep records of the closure of any old bank accounts – just in case any administration errors leave an account open and it ends up being charged fees for not maintaining a minimum balance. This could cause problems for expats trying to leave the UAE in the future.
Finally, remember that switching bank accounts can take time and requires a lot of paperwork, so be patient: there will be several trips to both your old bank and your new bank to ensure the process runs smoothly.