Digital wealth manager StashAway has raised the rate of return on its cash management portfolio to 4 per cent, as banks in the Emirates continue to hold back on offering the benefits of the UAE Central Bank’s eight consecutive interest rate rises to savers.
With inflation likely to remain elevated this year, leaving idle cash in a bank’s savings account means it is depreciating in value each day, StashAway said on Wednesday.
Previously, StashAway offered 3.3 per cent on its StashAway Simple portfolio.
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“We are committed to helping our customers build their wealth and this rate increase is one way that can empower them to get closer to their financial goals,” said Joseph El Am, general manager of StashAway Mena.
This month, the UAE Central Bank raised its base rate for the overnight deposit facility by a quarter of a percentage point to 4.65 per cent, from 4.4 per cent, after the US Federal Reserve increased its policy rate by 25 basis points as it continues to fight against inflation.
While the cost of borrowing has risen in line with the interest rate increases, banks have been slower to pass on the benefits to savers.
ADIB's Ghana savings account, for example, offers an interest rate of 0.36 per cent but requires a minimum salary of Dh20,000 ($5,445) and minimum balance of Dh3,000.
An Emirates NBD savings account offers an annual return of 0.20 per cent, while an HSBC savings account has an interest rate of 0.05 per cent.
Last week, UAE low-cost robo-advisory platform Sarwa unveiled a cash account with a 3 per cent annual interest rate to help customers boost their savings power.
Sarwa Save is aimed at people who are about to start investing or investors who want to earn a return on their parked cash, the company said.
“Having a short-term investing option is an important part of a good financial plan. Our clients were asking for a product to park their cash while earning returns,” Mark Chahwan, co-founder and chief executive of Sarwa, said at the time.
StashAway Simple is a high-yield cash management portfolio that has no minimum deposit, no lock-in periods and no withdrawal or management fees.
The rate increase for StashAway Simple will offer customers the opportunity to earn more on their savings and help them to combat inflation and build wealth over time, the company said.
“Whether you're saving for a big purchase, building an emergency fund or simply looking for a better way to grow your money, StashAway Simple offers a convenient and effective solution,” Mr El Am said.
Founded in 2016 in Singapore, StashAway expanded its operations to the UAE in November 2020 to tap into a growing segment of affluent investors looking for low-cost ways to build their wealth.