But it doesn’t have to be if you know about the different types of accounts available and what they are for. Let’s talk about the most comment bank account types and whether or not they are right for you.
Checking Accounts
Whether you’re in Abu Dhabi as a national or an expat, you should have a checking account even if you don’t open any other types of financial accounts. You may be asking your self, “why is that?”
Regardless of why you’re in the UAE, you will have to be self-sufficient. You will need to pay bills, utilities, purchase groceries and more. For this, it is easier to use a debit card, which can use the available funds in your checking account whenever you make a purchase. It’s definitely easier than carrying cash around.
With a checking account, you never have to worry about having exact change and your bank statements serve as records of your payments. If you use checks to pay your bills, you have in them an instant receipt. Many parents also add their children to their designated checking accounts to share funds with them.
A checking account may be right for you if:
- You are planning to pay utilities and bills online or using convenient checks
- You shop a lot and want an alternative to carrying exact change in cash
- You would like to provide your children with an allowance
- You have children in college who rely on your household funds to live
- You would like to make purchases fast, convenient and safer
Savings Accounts
Savings accounts are more of a long-term option for families interested in saving money for the future. Savings accounts do have some restrictions. You may only be able to withdraw from a savings account a limited number of times per month. Banks enforce this to promote the saving of money. Some savings accounts pay interest on the account’s balance. For example, FAB Bank’s personal savings accountpays interest in accordance with the current rates.
A savings account may be right for you if you are saving for:
- A large future purchase, such as a home or a car
- Your child’s education
- A vacation, trip or expecting expenses incurred from hosting visiting family
- A wedding
- Emergency funds
Retirement Accounts
Retirement accounts are made to save money for future retirement and each bank has a different name for these accounts. Some banks may match your deposit up to a certain percentage and these funds can only be withdrawn at retirement without penalty.
It is estimated that if expecting to retire at 65 in the UAE, a 35-year old should begin saving 1,200 AED, a 45-year-old 2,500 AED, and a 55-year-old 6,500 AED per month. If you’re planning on saving for retirement, this is the correct account for you.
Regardless of your financial situation, a bank account in some form or another is a safer option for storing your money and providing your family with a more convenient style of living.