Fixed Deposit Accounts
Fixed deposit is the financial instrument offered by banks or financial institutions where the customers can deposit their funds at high rates of interest. Also known as term deposit, this account is opened for a specific period of time as decided by the bank and the account holder.
Once the funds are deposited with a bank, the account holder starts to earn interest depending on the tenure of the deposit. Generally, the main feature of an FD is that the account holder cannot withdraw funds before maturity, however, they can make a withdrawal on paying a certain amount of fee.
Why Should You Get a Fixed Deposit Account?
While the fixed deposit interest rates are higher than the interest rates offered on a savings account, there are many other reasons why an FD account is needed. Listed below are the reasons why one should opt for an FD in the UAE.
The investments made on fixed deposits give assured returns. Generally, the returns are higher than those offered on a savings account. The returns, however, may vary depending on the tenure of the deposit.
Fixed deposits in the UAE offer flexibility in choosing the deposit tenure. Every bank has a certain minimum and maximum tenure. The applicant can choose the duration of their deposit within this minimum and maximum range.
This deposit is one of the safe investments in the UAE. Hence, it is ideal for those who do not want to put their money at high risk.
The fixed deposit is a type of account that helps the account holder in developing a habit of proper savings.
Features and Benefits of Fixed Deposit Account
Listed below are some key features and benefits of fixed deposits in the UAE.
FD is a fixed-term investment, which lasts for a particular period of time as pre-determined. The account holder can withdraw money from this account only after the end of this period. However, they can make early withdrawals on paying a certain amount of fee to the bank.
Higher Interest Rates
One of the benefits of FD is that the account holder can enjoy best fixed deposit rates in UAE. Although the liquidity in these accounts is comparatively less, there are higher interest rates available as compared to other accounts.
Helps Opt for Loans
Sometimes because of uncertainties, liabilities may arise and the account holder may be in urgent need of cash at that time. In such a condition, they can opt for a loan against their deposit account.
Most of the banks in the UAE offer an option of automatic renewal on these term deposits. Through this option, the FD gets renewed automatically after maturity without having the account holder to do it manually.
Distribution of Profits
The profits or interest earned on the fixed deposit is distributed to the account holder either monthly, quarterly, half-yearly, or annual basis. This frequency of profit distribution depends upon the discretion of the banks.
Availability of Accounts
A lot of banks in the UAE allow their customers to open joint FD accounts. Not only this, these deposits are available for minors too. Following are the parties who can opt for these accounts.
- Individuals (including minors)
- Joint Stock Companies
- Sole Proprietorship
- Limited Liability Companies
Best Banks for Fixed Deposit Account
Listed below are a few banks that offer best fixed deposit rates in UAE.
|Bank Name||Minimum Deposit (in AED)||Currencies||Main Features|
|Emirates NBD||10,000||AED, GBP, USD, EUR||
|Abu Dhabi Commercial Bank||5,000||AED, USD, EUR||
|Mashreq Bank||10,000||AED, GBP, USD, EUR||
|Standard Chartered||25,000||Various other currencies apart from UAE dirhams||
|Ajman Bank||10,000||AED & USD||
(Updated as on June 26, 2019)
Eligibility Criteria and Documents Required to Open a Fixed Deposit Account
For getting a fixed deposit in UAE, the applicant has to meet the basic eligibility requirements as set by their bank. Different banks may have different eligibility requirements. Listed below are some of these requirements.
Some of the banks in the UAE allow only the residents of UAE for opening bank accounts with them. These UAE residents will have to submit a valid proof of residence for getting an FD to the bank.
Minimum Deposit Amount
There is a minimum deposit amount as determined by the bank. The applicant has to open their deposit account with at least this amount.
The applicant has to be of a certain age for being eligible to have an FD. This age limit is also decided by the discretion of the bank concerned.
Note: The applicant might have to meet more eligibility requirements in addition to the ones mentioned above as per the discretion of the bank concerned.
Listed below are the documents required for opening a fixed deposit.
|Identity and Address Proof||
|Documents Related to Employment||
Note: The applicant might have to submit more documents in addition to the ones mentioned in the table as per the discretion of the bank concerned.
Frequently Asked Questions on Fixed Deposit Account
Question 1: Am I eligible for investing in Fixed Deposit in UAE?
Answer: You are eligible for investing in this deposit if you meet all the eligibility requirements of the concerned bank. These requirements may include minimum/maximum age, minimum monthly salary, minimum deposit amount, UAE residence and more as per the discretion of the bank.
Question 2: How will be receiving my interest amount?
Answer: You will receive your interest amount after it has been calculated using the fixed deposit interest calculator. If your funds have been deposited under a traditional scheme, your interest will be credited to your given savings account on a quarterly or monthly basis.
Some banks give you the option of choosing whether to receive the amount on an annually, quarterly or monthly basis.
Question 3: Do I have the option of breaking my deposit before its maturity?
Answer: Yes, you can break your deposit before it gets matured. If you are in urgent need of funds, you can get a pre-mature withdrawal from your deposit. You have the option of either breaking your FD account or partially withdrawing it.
Question 4: Do I have to bear any penalty for withdrawing my fixed deposit before its maturity?
Answer: Yes, you have to pay a fee for withdrawing your deposit before its maturity. The amount of fee may depend upon the sole discretion of the concerned bank.
Question 5: What would happen if the depositor dies?
Answer: In case the depositor or the account holder passes away, the nominee has the right to claim the deposit amount upon maturity.
Question 6: Can I take a loan against my fixed deposit in UAE?
Answer: Yes, some of the banks in the UAE offer you the option of taking a loan against your deposit. Rather than paying a fee for breaking the FD before its maturity, you can obtain a loan against it. This way, you get access to funds for dealing with your emergency, while still earning interest on the funds that are deposited in this account.
The maximum loan that you can avail is a certain percent of your deposit amount. This amount is decided by the discretion of the concerned bank. The rate of interest charged on these loans might be a little higher than the rate of interest paid on your FD.
Question 7: What can be the minimum & maximum duration of investment in a Fixed Deposit?
Answer: The minimum duration of an FD can be as low as 7 days, while the maximum tenure may reach up to ten years. However, this minimum & maximum tenure is decided by the banks, therefore, it may vary from bank to bank.
You can select the tenure of your FD account keeping in mind the minimum and maximum duration offered by the bank.
Question 8: Can I open my deposit account in the Emirates with a currency other than the UAE dirhams?
Answer: Yes, most of the banks in the UAE offer you the option of opening your fixed deposit account in a currency other than AED. The available currencies are USD, Euro, GBP, and more.
However, not all banks offer all these currency options. The currencies available may vary from one bank to another.