Banking in the UAE may seem very unfamiliar to many expats moving here. You have the choice of both conventional and Islamic banking and, because there is currently no centralised credit scoring system (although it is just being set up), there are many layers of admin you have to deal with to get bank accounts, credit cards and loans – especially since the economic downturn.
Sorting out your banking and your residency are the two big things you need to get done in your first few weeks in the UAE – without these, you won’t be able to rent a place, hire a car or pay school fees.
A common practice here in the UAE, when it comes to rent, is having to pay the full year’s rent either upfront or in two or three instalments by cheque – which you can’t get until you have an account.
Personal finance and banking in the UAE
It’s worth familiarising yourself with the banking landscape and the 50+ banks in the UAE before you choose your bank, as it will take you some time to get set up. Check in advance whether the banks you shortlist offer credit cards or loans you might be interested in later, as they will often be easier to get and/or have preferential rates for existing customers. You can get a full list of banks and their products on Souqalmal.com with rates, fees and eligibility criteria.
Big local banks include Emirates NBD, Abu Dhabi Commercial Bank (ADCB), Mashreq, RAKBANK, National Bank of Abu Dhabi (NBAD), First Gulf Bank (FGB), Commercial Bank of Dubai (CBD) and Commercial Bank International (CBI). Islamic banks include Abu Dhabi Islamic Bank (ADIB), Emirates Islamic Bank (EIB), Dubai Islamic Bank (DIB), Noor Bank and Al Hilal. And, of course, well-known international banks such as HSBC, Barclays, Citibank and Standard Chartered have a presence here too.
Work out which banks have branches close to your home or work, and who your employer banks with, as this may make it easier for your salary to be transferred and often less costly.
To open a bank account in the UAE, you’ll need (for individual or joint accounts):
Copy of passport(s) and residence visa page(s), as well as original passport(s) for validation
Original Emirates ID(s)
Original labour card or work ID (for female applicants on father on husband's sponsorship)
Original trade license (for self-employed customers)
Sponsor’s letter of no objection
If you want to transfer your salary into the account, an original salary transfer letter from the employer must be provided.
There is no central credit scoring yet, although the Al Etihad Credit Bureau has begun the process of centralised reporting on individual consumers’ debt burden and credit history.
It’s therefore quite a unique feature of the UAE banking system that your company’s financial stability actually counts towards your personal creditworthiness. Some companies – start-ups, for instance, are considered risky and are therefore tagged as a ‘non-listed company’ by some banks. That means you may have issues in getting a loan or have to pay higher rates. It’s a question worth asking early on in the application process.
At this stage, you’re probably not yet ready for a credit card or loan but, again, it’s worth choosing your bank wisely to start with to take advantage of the other products they offer that you may want in the future. For instance, cashback or discounts on school fees and big-ticket items like Ikea furniture or electronics from Sharaf DG could be useful in that expensive first year of many outlays.
Set up a savings account early on (you probably came here to save, right?) and put away a portion of your salary before you get tempted by all the fun the UAE has to offer. A pot of AED 100,000 is a reasonable amount for most expats to aim for over five years or so.
As you start to save, make sure you’re not just putting it into a ‘zombie’ account with close to zero interest. Think about:
A standard savings or term deposit, for around a 1 percent return per annum
The UAE’s National Bonds for a 2 to 3 percent return (and the chance to win prizes each month)
Corporate or government bonds, for a 4 to 6 percent return
6 to 9 percent on stocks (or 10% or more on riskier emerging stocks)
Or even angel investment into the many start-ups in this entrepreneurial country.
Just pick carefully and know your personal appetite for risk – because obviously the higher returns come with higher risks. And ensure you keep enough money liquid for a rainy day (rare in the UAE) or an unforeseen emergency.
Whatever you do, don’t get so excited by the lifestyle that you forget to save. Budget, save and borrow wisely, and your time in the UAE will be well spent indeed.