If you follow us on Instagram, you will know that last week the UAE Central Bank reduced its base interest rate to 4.9%. Banks respond to this by lowering the interest rates they pay on savings accounts.
The good news is that you can still lock in the best current rate of 5.5% before they go down, so act before the end of September to make your money work for you that little bit more!
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Why should I put money in a savings account?
Any time your money sits in a 0% interest bank account, you are actually LOSING money. That's because of inflation, which increases the cost of things you can buy for your money. UAE inflation was 3.9% in the year up to April 2024.
Instead, your money could be making you up to 5.5% per year, outweighing the impact of inflation. So for every 10,000 you save, you make 550 per year!
Fixed vs. flexible savings accounts 🔓
Fixed: Fixed savings accounts require you to put your money away for a fixed period, usually 1, 3, 6 or 12 months (2 or 3-year fixes are also available). In exchange, you often get a better interest rate and it's locked in for the duration of the fix (i.e. the bank cannot lower it suddenly). Some banks will allow you to withdraw savings from a fixed savings account BUT it will come with a penalty, so check the T&Cs before committing.
Flexible: You can add and withdraw any money at any time without any penalties. However, the interest rates are usually lower and the bank can reduce them at any time (which is likely, as further base rate cuts are expected from the Central Bank this year).
Best savings accounts 💰
| Bank | Interest rate | Why we like it… |
|---|---|---|
| Wio Bank — Fixed and flexible Saving Spaces | 5.5% for a 1-year fix (but you need to open it before 30/09!), 4.25% for a flexible space | Best rates, easy account opening, fully digital. BUT: You do need a min. balance of 35,000 across your account to get these rates with a Wio Plus account. |
Before the base rate change, FAB iSave was competitive at 5.25% however, their promotion is ending 30/09 meaning their bonus rate will only apply until the end of the month. Liv bank recently reduced its flexible rate to 4% and 3.5% for a 1-year fix.
Yes, the current choice is limited but let us know if you've seen any better rates elsewhere!
Our recommendation - Fix now!
With further rate cuts expected, these savings rates will continue going down. If you can, you should fix now. With the 1-year fix on Wio, Wio will still pay 4.25% on any amount withdrawn before maturity so your risk is minimal.
Isn't opening a new account complicated? ⏱️
No, it really isn't. With digital banks such as Wio, the whole process can be completed in the app within 15 minutes. You get your IBAN straight away and can put your money to work the same day.
Is it safe? 🔑
Yes, as safe as can be. Any banks we would recommend are licensed and supervised by the UAE's Central Bank. There is no formal deposit guarantee in the UAE like in some other countries. Historically though, any banks coming into financial difficulties were bailed out by the UAE government as the reputational damage to the UAE economy is too big.
The added benefit is that your money is not sitting in your current account, so it's less susceptible to debit card fraud (please never keep large amounts in your current account!).
Happy saving!
