Dubai. U.A.E., June 30, 2018.  Camelia Georgescu at her residence at Arabian Ranches.
Victor Besa / The National
Reporter:  Alice 
Section:  Business
Dubai resident Camelia Georgescu only keeps a small amount in her UAE savings account, instead preferring to store her money in real estate. Victor Besa / The National 

Is cash about to make its long-awaited comeback?

Once upon a time cash was king, but it lost its throne when global interest rates were slashed after the financial crisis leaving savers with a near-zero return.

Many switched into high-risk assets such as property and stock markets, often being well rewarded in the process as both have delivered a princely return since 2009.

However, as interest rates steadily climb in the US with a knock-on effect on rates elsewhere, cash may finally be recovering some of its lost powers.

Savers in the UAE can now find rates of more than 3 per cent on some accounts. So, is cash about to make its long-awaited comeback?

It will take a lot for investors to recover their faith in cash, but the process may accelerate as rates rise, amid growing signs that stock markets may have peaked.

In June, US Federal Reserve chairman Jerome Powell lifted interest rates to a range between 1.75 and 2 per cent, saying the economy was strong enough to withstand higher borrowing costs without choking off growth. Higher rates should keep a lid on inflation and prevent the US economy from overheating, as well as giving the Fed some ammunition to deploy during the next downturn.

This was the Fed's seventh hike in three years but there are more to come, with Mr Powell signalling a further two increases in 2018 alone.

The UAE dirham is pegged to the greenback so higher US rates are good news for local savers and the Central Bank of the UAE duly responded by lifting the benchmark interest rates on its certificate of deposits by 25 basis points to 2.25 per cent. The certificates are the monetary policy instrument it uses to transmit rate changes to the UAE banking system.

Shaker Zainal, head of retail banking at CBI Bank, says when the Fed hikes interest rates the Central Bank of UAE also increases its repo rate, which is a signal for banks to increase their deposit rates. "It is a very good time for savers as rates are now much more favourable -  from 2 per cent or even 3 per cent on a fixed rate savings account.”


Read more:

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Revealed: what the new UAE bank fee changes actually are


CBI offers a range of accounts including its “bundled” package, the Ultra Saver Offer, which pays 3 per cent in fixed deposits of a minimum Dh50,000, plus a 1 per cent bonus on its Mabrook Saver account and with multiple entries into Mabrook's monthly dirham millionaire draw as well.

Ambareen Musa, founder and chief executive of comparison site, says its latest analysis shows the average interest rate on deposit accounts in the UAE now stands at 1.36 per cent. "This is a substantial 20 per cent increase on two years ago, when the average return on deposit stood at just 1.13 per cent."

This may still be low by historical standards, but at least it is heading in the right direction and Ms Musa expects higher savings rates to entice more UAE residents to switch at least some of their money back into cash.

This should also help savers protect the value of their money in real terms. “Many people don't realise they are losing money in a low or zero interest account, as inflation erodes the value of their money,” says Ms Musa.

She says savings and deposit accounts in the UAE are now far more sophisticated, with greater choice and rates similar to those in major developed economies such as the US or UK. “Accounts now come in a wide choice of currencies, with tiered returns, lucky draws to win a million dirhams or reward points on debit card usage," she explains.

“There are even some hybrid accounts that combine the flexibility of a savings account with the higher return of fixed deposits. The choices are endless.”

Ms Musa warns that higher interest rates will also ramp up borrowing costs and hit those with large debts, while also proving a drag on house and share price growth. “At least higher savings rates will help cushion some of the blow.”

Khatija Haque, head of Mena research at Emirates NBD, says rising interest rates are a double-edged sword, good news for savers, bad news for borrowers. “Households with mortgages will feel the biggest impact, as their monthly payments will rise," she explains. "They will have less spare money to spend and save, which is why higher interest rates are usually followed by weaker consumption and slower economic growth.”

Higher interest rates also make it more expensive for businesses to invest in expansion, and projects may need to deliver a higher rate of return to be feasible. This is also a drag on economic growth, Ms Haque says.

Dubai resident Camelia Georgescu is among the many UAE residents that have largely given up on cash, preferring to invest her faith – and future wealth – in property instead.

She does have a savings account with international bank HSBC, and although it pays a market leading rate she only keeps a minimum amount in there. "Would I like to see higher interest rates? Of course I would. But for now, my focus is elsewhere,” says Ms Georgescu, 42.

The economist for the Chalhoub Group lives in Arabian Ranches but owns investment property in her native Romania, and believes real estate will continue to be the better option.

Romania was the fastest-growing European economy last year, with GDP growth of 6.8 per cent. It is currently classified as a frontier market but will shortly be upgraded to emerging market status, which should drive investor inflows and further boost the property market.

Ms Georgescu, who has lived in Dubai for four years and the GCC for 17, says she will continue to favour property. “Higher savings rates would be encouraging, but I am not sure they will be able to beat real estate."

For now, those looking to save are hitting comparison sites to see where they can get the best return on their money. As confidence and interest returns, banks are launching new accounts all the time.

Rising global interest rates are likely to be a drag on property and stock markets, while global trade war threats or another eurozone crisis could inflict further damage.

Cash is a traditional safe haven in times like these, and now it is a more rewarding one as well. Take time to compare the market to work out which account is best for you.


Read more:

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Business Extra Podcast: Cost of living in the UAE compared to the rest of the world


Which savings account to pick

Which savings account suits you best depends on the interest rate and personal factors such as the size of your deposit and whether you are willing to lock your money away for a set period to secure a higher return.

RAKBank has responded to increased interest rates by launching four deposit and savings accounts this year, combining competitive savings rates with flexibility.

Its range includes the Islamic Fawrun Fixed Term Deposit account, where the rates depend on how much you save, and for how long.

For example, someone saving from Dh100,000 would get 1.4 per cent over three months, 2.8 per cent over two years, or 3.05 per cent over three years. Above Dh500,000, these returns rise to 1.6 per cent, 3 per cent and 3.25 per cent, respectively.

Its FD Plus account also pays tiered returns up to 3.25 per cent, while RAKbooster pays up to 2 per cent a year, with interest paid monthly basis. It also offers a “booster” of 0.5 per cent a year if no withdrawals are made, lifting the effective rate to 2.5 per cent.

Its Recurring Deposit account allows savers to deposit between Dh350 and Dh10,000 a month and get up to 2.5 per cent interest.

Frederic de Melker, managing director for personal banking at RAKBank, says competition for customers should continue to drive savings rates higher. “We continually monitor market rates to ensure we are always in line with, or ahead of competition to offer the maximum return on customer savings.”

Mr de Melker says another factor affecting people’s choice of account is where they expect interest rates to go next. “If you expect them to keep climbing, you might want an account that gives you a high return on your savings, but with the flexibility to step into a higher rate later. Fixed deposits are preferable for savers who are convinced we are at the peak of the interest rate hike. We have solutions for both.”

Some accounts offer innovative ways for setting money aside, such as the Shake n’ Save mobile app from Emirates NBD.

This lets you save small amounts of money instantly by shaking your mobile device, which generates a random figure within a pre-set range that is immediately transferred into a standard debit account.

Savers can make unlimited shakes per day, with interest of 2 per cent calculated on the daily closing balance, to a maximum of Dh100,000.

The Emirates NBD Fitness Account is a mobile-only account that encourages savers to boost their health and finances at the same time, by earning interest based on the number of steps they walk or run daily. It pays a basic 0.25 per cent which climbs to 0.50 per cent if you take 5,000 steps, 1 per cent for 8,000 steps and 2 per cent when they cross 12,000 steps.

Emirates Islamic’s flagship product is its Kunooz Savings Account, which lures savers with monthly grand prizes of either Dh1 million, a luxury car or Dh200,000 paid into their savings account. It also offers five daily cash prizes of Dh3,000 each.

The more you save, the better your chances of winning, with every Dh5,000 in your account giving you one shot at the monthly million, and every Dh1,000 giving you one shot at the daily cash prizes.

If you prefer a steadier but less spectacular return, Emirates Islamic’s e-Savings Account is a Sharia-compliant Wakala-based account where customers can earn an expected profit rate of up to 2 per cent a year, or up to 1.25 per cent for US dollar currency account. The bank’s Super Savings Account lets savers earn Skywards Miles on their deposits.

The Emirates Islamic’s Booster Wakala Deposit offers expected profit rates ranging from 2 per cent for one year to 2.57 per cent for five years, on a minimum balance of Dh100,000.

The biog

Favourite Quote: “Real victories are those that protect human life, not those that result from its destruction emerge from its ashes,” by The late king Hussain of Jordan.

Favourite Hobby: Writing and cooking

Favourite Book: The Prophet by Gibran Khalil Gibran

The Bio

Favourite holiday destination: Either Kazakhstan or Montenegro. I’ve been involved in events in both countries and they are just stunning.

Favourite book: I am a huge of Robin Cook’s medical thrillers, which I suppose is quite apt right now. My mother introduced me to them back home in New Zealand.

Favourite film or television programme: Forrest Gump is my favourite film, that’s never been up for debate. I love watching repeats of Mash as well.

Inspiration: My late father moulded me into the man I am today. I would also say disappointment and sadness are great motivators. There are times when events have brought me to my knees but it has also made me determined not to let them get the better of me.

Company Profile

Company name: Namara
Started: June 2022
Founder: Mohammed Alnamara
Based: Dubai
Sector: Microfinance
Current number of staff: 16
Investment stage: Series A
Investors: Family offices


Director: Denis Villeneuve

Starring: Timothee Chamalet, Zendaya, Austin Butler

Rating: 5/5


Featherweight Bout: Abdullah Al Qahtani v Taha Bendaoud
Bantamweight Bout: Ali Taleb v Nawras Abzakh
Bantamweight Bout: Xavier Alaoui v Rachid El Hazoume
Featherweight Bout: Islam Reda v Adam Meskini
Bantamweight Bout: Tariq Ismail v Jalal Al Daaja
Bantamweight Bout: Elias Boudegzdame v Hassan Mandour
Amateur Female Atomweight Bout: Hattan Al Saif v Nada Faheem
Featherweight Bout: Maraoune Bellagouit v Motaz Askar
Featherweight Bout: Ahmed Tarek v Abdelrahman Alhyasat
Showcase Featherweight Bout: Mido Mohamed v Yazeed Hasanain
Showcase Flyweight Bout: Malik Basahel v Harsh Pandya


Director: Rajesh A Krishnan

Starring: Tabu, Kareena Kapoor Khan, Kriti Sanon

Rating: 3.5/5

Asia Cup Qualifier

Venue: Kuala Lumpur

Result: Winners play at Asia Cup in Dubai and Abu Dhabi in September


Wed Aug 29: Malaysia v Hong Kong, Nepal v Oman, UAE v Singapore

Thu Aug 30: UAE v Nepal, Hong Kong v Singapore, Malaysia v Oman

Sat Sep 1: UAE v Hong Kong, Oman v Singapore, Malaysia v Nepal

Sun Sep 2: Hong Kong v Oman, Malaysia v UAE, Nepal v Singapore

Tue Sep 4: Malaysia v Singapore, UAE v Oman, Nepal v Hong Kong

Thu Sep 6: Final


Asia Cup

Venue: Dubai and Abu Dhabi

Schedule: Sep 15-28

Teams: Afghanistan, Bangladesh, India, Pakistan, Sri Lanka, plus the winner of the Qualifier

Prop idols

Girls full-contact rugby may be in its infancy in the Middle East, but there are already a number of role models for players to look up to.

Sophie Shams (Dubai Exiles mini, England sevens international)

An Emirati student who is blazing a trail in rugby. She first learnt the game at Dubai Exiles and captained her JESS Primary school team. After going to study geophysics at university in the UK, she scored a sensational try in a cup final at Twickenham. She has played for England sevens, and is now contracted to top Premiership club Saracens.


Seren Gough-Walters (Sharjah Wanderers mini, Wales rugby league international)

Few players anywhere will have taken a more circuitous route to playing rugby on Sky Sports. Gough-Walters was born in Al Wasl Hospital in Dubai, raised in Sharjah, did not take up rugby seriously till she was 15, has a master’s in global governance and ethics, and once worked as an immigration officer at the British Embassy in Abu Dhabi. In the summer of 2021 she played for Wales against England in rugby league, in a match that was broadcast live on TV.


Erin King (Dubai Hurricanes mini, Ireland sevens international)

Aged five, Australia-born King went to Dubai Hurricanes training at The Sevens with her brothers. She immediately struck up a deep affection for rugby. She returned to the city at the end of last year to play at the Dubai Rugby Sevens in the colours of Ireland in the Women’s World Series tournament on Pitch 1.

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