Reasons to open a savings account

What A Savings Account Can Do for You

Beyond earning interest, there are many convincing reasons why opening a savings account makes financial sense.

According to a recent survey, more than half of UAE residents struggle to save, while nearly a third admit to not saving a single dirham every month. One potential reason for this could be that many do not actively use a savings account.

What is Meant by Savings Accounts?

In simple terms, a savings account allows you to keep money you want to have access to at any time. The money deposited in a savings account accrues interest on a yearly base in the UAE. In this article, we will explore why you should have a savings account and some of the ways you can make it work for you.

Benefits of Having A Savings Account

One obvious benefit of a savings account is that you can make your money work for you by simply leaving it to sit and accrue interest. Remember that the more you deposit, the more interest you can generate over time. In some cases, you may also get preferential interest rates on larger deposits so make sure you check with your bank.

To get a sense of how much you can earn over a given period of time at a specified interest rate, a savings calculator can be useful. There are many calculators available online for free.

In addition to earning interest, some banks offer perks and rewards to customers who save and maintain a certain balance over time. Many banks have privilege programs in place that encourage customers to save by rewarding them with loyalty points such as Citi’s Emirates Advantage account.

Savings account holders earn a set number of Skywards Miles based on the value of the quarterly account balance. There is usually a minimum balance that should be maintained in order to qualify for air miles, to carry them forward, to earn access to more than 900 airport lounges worldwide and to avail the benefits and perks such as Emirates Skywards Silver Membership.

Saving can be difficult. Putting aside a certain amount of money as soon as your salary is credited is one effective way to curb impulsive spending and ensure that you are saving on a regular basis. Once your savings account is set up, the process of managing it is actually quite simple and hassle free. You most likely won’t have to do much besides checking the monthly statement to view your balance and interest earned.

People who are not saving for a specific purpose can use their savings account as an emergency fund that they withdraw from. Personal finance experts recommend having at least three to six months’ worth of living expenses in savings that can help you in the event of any financial difficulties.

If your savings and current accounts are with the same bank, linking the two together can prove to be practical and convenient. For example, you can easily transfer money between both accounts when needed. You can also arrange for funds to be automatically deducted from your savings account, should the balance on your current account not be enough to cover bills and payments. This option can help you avoid fees or penalties; however, such features may vary from bank to bank so be sure to check with your provider.

Tips to Maintain A Saving Accounts

1. Set goals: You are more likely to grow your savings if you set realistic targets that you can work towards.
2. Automate: Set up automatic transfers to your savings account every month. This will make your life a lot easier as it can be difficult to stay disciplined otherwise.
3. Read terms and conditions: Terms and conditions on savings account may differ greatly from one financial institution to another. While some banks may require a token minimum balance, others may set a comparatively steep threshold in order to keep your account or to qualify to earn interest.

By following these tips, you can discover the far-reaching benefits of opening and maintaining a savings account. Once you get accustomed to putting money aside, your mindset and habits will gradually change until saving money becomes just as easy as spending it.

Customers in the UAE who open a Citi Savings Account can enjoy saving in several major currencies, competitive interest rates, and customer-centric digital banking services. Citigold clients who open a Citibest account with a minimum balance in the range of $0 to 9,999, can earn 0.05% in interest on a monthly basis. Interest rates of 0.10% and 0.15% apply to Citibest accounts with balances ranging from $10,000 to $999,999 and $1 million or more, respectively.