Sunday, May 12, 2013
The importance of saving should not be underestimated. Savings give people a sense of security that when something unfortunate happens, such as losing a job or dealing with an unexpected medical expense, they have an easily accessible stockpile of cash to keep them afloat.
Setting aside money regularly also helps people meet their short and long-term goals - a son’s college tuition, a dream home, an expensive holiday or a comfortable retirement.
Unfortunately, the culture of savings has yet to gain ground in the country. According to National Bonds’ GCC Savings Index released last December, only 1 per cent of residents in the UAE would consider their savings as “more than enough” for their future.
Seven in every 10 people (71 per cent) feel that their savings are less than they had originally planned, and among those who have caught on the habit, 45 per cent are able to save only a tenth of their earnings or even less.
The figures are not surprising, considering that saving is a mundane task and deposit accounts hardly yield substantial payouts.
Perhaps a good motivation would be to be to add an element of fun to building your savings. Almost every bank in the UAE is running a promotion that encourages people to save by offering a lottery prize for their money.
The mechanics are very straightforward. Just buy a savings certificate or open an account with a bank and you will automatically earn the chance to win a prize. Some of these schemes, however, don’t guarantee an interest.
If you’re wondering what these prize-linked savings schemes are, let’s take a look at some examples. Most providers today dangle a million dirham cash prize, although many also offer other rewards such as smaller cash amounts on a daily basis.
For purposes of comparison, the draw frequency and minimum investment in the summary sections below refer to the grand prize only.
First Gulf Bank
The bank’s savings programme promises “guaranteed” interest on your money, aside from a chance to bag cash prizes. If you buy Dh100 worth of savings certificate, you will be eligible to win in daily and monthly draws. To be eligible for the grand prize draw, you need to invest at least Dh5,000.
Grand prize: Dh1 million
Draw frequency: Quarterly
Investment: Dh5,000
Mashreq
Like First Gulf Bank, Mashreq sells savings certificates that qualify the holder to win a million dirhams. The certificates can be purchased with cash, credit card or debit card and qualify the holder for all the prize draws. The bank has recently revised its prize structure to distribute more smaller rewards of Dh5,000 and Dh100,000 in a single month and declare two millionaires, an Emirati and a non-Emirati, in the mega draw.
Grand prize: Dh1 million
Draw frequency: Every few months, with the next one in July
Investment: Dh1,000
Union National Bank (UNB)
Savers have the option to buy UNB certificates in denominations of Dh100, Dh200 and Dh500, to gain a chance to win cash prizes. Your winnings will, however, depend on the value of your certificate. If you are picked in the grand draw, the bank will multiply your certificate value by 2,000 times. A Dh100 certificate will get you only Dh200,000, so if you want a Dh1 million jackpot, it’s best to save at least Dh500.
Grand prize: Dh1 million
Draw frequency: Monthly
Investment: Dh500
National Bonds
While most banks don’t offer regular returns for prize-linked savings, National Bonds gives UAE residents the chance to become a millionaire and earn profits with their savings at the same time. The investment company has recently changed its prize structure to grant smaller prizes every minute, but everyone’s eyes are on the Dh1 million jackpot.
Grand prize: Dh 1million
Draw frequency: Monthly
Investment: Dh100
Abu Dhabi Islamic Bank
The bank offers Dh2 million grand prize to a lucky customer every four months, but for you to be eligible, you need to open an account and deposit at least Dh20,000 with the bank. While the ticket to the jackpot looks pricey, the mega prize is the biggest amount given away in a single raffle. Your initial savings automatically earn you a single entry and if you hold on to your money longer, you earn an extra entry every month. For example, if you keep your Dh20,000 for four months, you will earn five draw entries.
Grand prize: 2 million
Draw frequency: Every 4 months
Investment: Dh20,000
Feeling motivated to save now? Before you head to your bank, consider these first:
• Watch out for hidden fees when buying savings certificates. Your bank could charge you Dh35 every time you buy one.
• Keep an eye out for eligibility criteria. Some providers may require you to purchase certificates 30 days in advance to qualify for a draw.
• Depending on your provider, redeeming your money less than 3 months from deposit or purchase will invite another fee.
• Not every certificate entitles you a ticket to win Dh1 million. At some banks, you need to invest a minimum of Dh500 to earn an entry.
By Cleofe Maceda, Senior Reporter
Gulf News 2013. All rights reserved.
