Compare banks before choosing one

Q: Having just moved to the UAE, I was wondering how you would go about selecting a bank. What are the criteria you would suggest?

A: As with many things when you first arrive in the UAE, you are spoilt for choice in the number of banks and banking services that are available. A range of banks - both local and international - are represented here, although you may not be able to access a full range of services until you have your residency visa.

As with most financial decisions, it's worth doing some shopping around to compare and contrast the different banks on offer. Often when people arrive in the country, they automatically elect to work with their employer's preferred bank, since this tends to be the most convenient and easily-accessible option.

However, in the longer term, your choice of bank will have a significant impact on your financial health, so it's important to choose the one that best fits your needs and goals.

The key factors to compare when examining banks are features, services and fees. Make a list of them, then determine what the long-term costs and benefits of each bank will be.

Start with features. Probably the most important feature to consider first is the interest rate. If the available accounts pay interest, ask for the "annual percentage yield", which will make it easier to compare different rates if they are calculated at different frequencies.

On the other hand, you may go for Islamic banking, so that your account doesn't receive interest (and doesn't offer an overdraft). Sometimes the returns offered from these accounts are equal to - or often greater than - interest on a traditional account. Ask how this is calculated, and do some quick comparisons.

Convenience

Another key feature is convenience. Always remember that your time has a real value, so if the bank doesn't have branches near you, or has opening hours that don't match yours, you might want to look elsewhere.

Also consider availability of funds. It's worth asking what the length of time is between you making a deposit and being able to withdraw those funds, since different banks have different approaches. If you're sending money home for specific payments, this could be a critical issue.

Having thought about the features, you might then want to consider the services on offer, and how relevant these are for you. Look at everything from advisory services, phone support through to credit card availability. Also, look at more basic issues, like the number of ATMs available and the reach of the bank's network across the region, if you are going to be travelling a lot.

Finally - but most importantly - consider the fees. Take a close look at the costs associated with the account, and try to estimate how much having the account will cost you over the space of a year. Some banks have significantly raised service charges this year, so it's worth asking about any recent changes to the account you're applying for.

In particular, be aware of the hidden costs associated with the account. It's worth finding out what the bank charges for services like issuing a liability letter - which you will need if you apply for a loan.

In addition, find out if there are ATM surcharges or charges for using "foreign" ATMs.

Work out if it will be possible to use only your own bank's ATMs in the course of your daily life, since - over time - surcharges can eat into your savings.

- The writer is sales director at Nexus, a leading regional financial adviser. The opinions expressed above are the writer's and don't necessarily represent the views of Gulf News.

Please send your questions to advice@gulfnews.com.