In this guide, we summarise how savings accounts work – from interest rates to rules on accessing your money – and look at some alternatives for comparison.
Savings accounts allow you to earn interest on the money you put away.
You may have less access to your money in a savings account than a current account that’s designed for everyday spending, but you can earn interest to help your savings grow.
Typically, the higher the interest rate, the more restrictions on accessing your money.
The right savings account for you will mainly depend on how much access to your money you need, and what kind of interest rate you’re looking for.
There are two main types of savings accounts in the UAE:
Term deposits have a fixed term, typically ranging from 1 to 36 months or more. If you withdraw money during your fixed term, you’ll either be charged or you’ll lose some or all of the interest you’ve earned.
Generally, the longer term you commit to, the higher interest rate you’ll get, but access to your money will be more limited.
Explore: Our Term Deposit Account
Easy-access, or flexible savings accounts, usually have lower interest rates, but you have greater control over and access to your money.
You might be able to withdraw from your savings account via online banking at any time, and some accounts even come with a debit card for cash withdrawals and over-the-counter transactions.
Explore: Our Savings Account and E-Saver Account
The interest rates you’ll see when comparing savings accounts are the annual rates. They represent what you’d earn on your balance if you held it for a year.
Some savings accounts pay interest monthly. This means you get a month’s worth of interest each month, instead of a year’s worth at the end of each year or the total amount at the end of your term.
One benefit of interest being paid monthly is that you start earning interest on that interest payment straight away.
Some savings accounts require you to have a minimum balance each month, and you could be charged for having less than the minimum at any point.
Keep an eye out for your account’s minimum requirements and what the charges are. Our E-Saver Account, for example, has no minimum monthly balance.
If you’re looking to benefit from the higher interest rate of a term deposit account, but still want money to hand for an emergency, you could consider a secured overdraft.
Our secured overdrafts allow you to arrange an overdraft attached to your HSBC current account for up to 95% of the value of your term deposit held with us.
This means you can get a more attractive interest rate on your savings compared to an easy-access savings account, but still have an emergency fund to hand that you can use without needing to break your term deposit.
Secured overdrafts charge interest, so you’ll only want to use it if you absolutely have to. But the interest rates are typically lower than on unsecured overdrafts.
Explore: How overdrafts work
One of the main benefits of a savings account is that, if used correctly, your money can’t go down in value, aside from the impact of inflation.
Your money is not invested in the stock market, so you should always get back at least what you put in.
This depends on your savings goals, your attitude to risk, and your personal preferences.
Here’s a quick list of the main differences between savings and investments to help you decide:
Explore: Saving or investing?
