Dubai-UAE: 31 December, 2016: As the New Year approaches, it brings with it new expectations, new aspirations and new resolutions. Along with shedding a few kilos, picking up a new skill or travelling to a faraway land, it’s also time to get a handle on your finances. Here are a few questions for your bank as a first step in this direction.
Ask all the usual questions, even if you know the answers:
- What are the benefits of banking with you?
With any bank, the list is bound to be long. Checking account, savings account, debit card, credit card, cashback rewards, vouchers for top restaurants – you name it!
- How easy is it to bank with you?
Some of the points to consider on this checklist are: Are there enough branches near your home / place of work? How about ATM machines? It would certainly be a challenge to travel several kilometres every time you want to deposit or withdraw money.
- How many times a day/week/month can I make a withdrawal, and how much is the limit?
Again, this is a point worth looking at prior to opening an account, because you never know when you might need money!
- Do you have online/mobile banking facilities?
Here you need to consider whether the bank offers mobile banking services such as checking account balance, bill payments, and sending money home – after all, you don’t want to stand in line to do all that, do you?
- What are the charges?
Some banks charge you for maintaining current/savings accounts, falling short of minimum balance, using ATM cards, servicing standing instructions, online bill payments or money transfers. So read the fine print.
- What happens if I overdraw?
Well, we all know what happens, but it would be useful to have an idea of the actual numbers involved.
Now ask some more questions – the not-so-obvious ones:
- So where does my money go?
No, your bank doesn’t store your money in large underground vaults and guard it with missiles and machine guns – instead, it puts it to good use. Traditionally, your bank will lend out your money to others at a higher interest rate, which is how it makes a profit. In Islamic banking, however, giving and taking interest is forbidden, so the profits come from investing the money into businesses and activities that are considered ‘halal’ or ethical and beneficial to society.
- How safe is my money in your bank?
Now, that’s a tricky question. Banks in the UAE are generally considered a safe bet compared to their global counterparts. Even back when the global financial crisis hit, all deposits in local and international banks regulated by the Central Bank of the UAE, regardless of the amount, came with 100 per cent guarantee for three years.
- What happens to my money if your bank fails?
To know the background to that question, you should understand why banks fail – precisely because they don’t store your money in large underground vaults and guard it. Banks invest your money – either as loans or into businesses. So ask your bank once again what it will use your money for, and make sure there is no mention of investments of a highly speculative nature. While insurance covers bank deposits up to a certain amount in many countries, financial institutions that follow Islamic banking principles share the losses with their customers just like the profits - since their relationship is a partnership.
And finally, the mother of all questions:
- What did I miss in the fine print?
Transparency is very important when it comes to financial dealings. We all have that one friend who overlooked the clause on credit card payment rules and ended up crying on our shoulder for months on end. So to reiterate the point made earlier, make sure you read above, below and between the lines before you sign on the dotted line, especially if you are going to incur any liabilities.