Opening a Savings Account07.06.2023
Of all the financial accounts out there, a savings account is one of the most simple and sensible ones. Opening a savings account is as easy as maintaining it. It offers the features and benefits of modern banking along with a modest return. Plus, different savings accounts allow you to make the most of it as per your account activities and financial decisions.
This is what we discuss in this quick guide savings account. We’ll also touch on how to find the best savings account in Kuwait for you.
Before we get into that, let’s first understand the meaning of a savings account.
What is a Savings Account?
A savings account is a type of bank account that earns interest on the deposited money. These accounts are considered safe and reliable options for storing cash needed for short-term expenses, despite the interest rate being typically low.
Features of Savings Accounts
All banks in Kuwait offer savings accounts. There is generally no expiration date on a savings account, and one can close the account anytime.
Their features and benefits vary for different banks, but they typically include the following:
- Banks provide interest on deposits made in savings accounts, which is determined by factors such as interest rates and deposit amounts
- Some banks offer savings accounts with no minimum balance requirement, while others require a certain amount to be deposited
- Savings accounts offer the flexibility of withdrawing money at any time and from any location, although some banks may have restrictions on withdrawal amounts and frequency
- Money can be withdrawn from a savings account using an ATM or a debit card, which may come with additional charges depending on the bank and location
- Many banks also provide a passbook and checkbook when opening a savings account
- A savings account comes with online banking transaction options as well
Different Types of Savings Accounts in Kuwait
Opening a savings account is a great way to earn interest while also having the flexibility of easy liquidity. Different types of savings accounts in Kuwait offer different range of returns and accessibility of your deposits.
Savings accounts in Kuwait can broadly be divided into three categories:
- Regular Savings Accounts - The most common type of savings accounts in Kuwait where you can deposit and withdraw money anytime and avail of all basic banking services. However, the interest rates are quite conservative
- Notice Savings Account - This type of savings account requires the account holder to give the bank notice (couple of weeks) before withdrawing funds. It typically offers a higher interest rate than a regular savings account
- Lucky Draw Savings Accounts - A special type of savings account that enables both banking features and draw participation. Lucky draws are organized periodically, and your chances depend on the amount of deposit between two such draws
Online Savings Accounts
An online savings account is a type of savings account that is offered by financial institutions that operate solely online rather than through physical branches. These accounts typically offer many of the same features and terms as traditional savings accounts, but they have historically been known to offer higher interest rates. So, more of a version of savings account than an alternative to it.
However, in order to take advantage of an online savings account, one must be comfortable with online banking and may need to transfer money to the account via online banking or other electronic means.
Interest Rates of Savings Accounts in Kuwait
Many of us open savings accounts considering the interest rates. It varies from bank to bank and depends on various factors.
An important one of them is that the Central Bank of Kuwait sets the benchmark interest rate basis inflation, economic growth, monetary policy, etc. Banks factor this and their own internal policies to offer competitive savings accounts interest rates in Kuwait.
Advantages and Limitations of Savings Accounts
Like everything in finances (and life in general), we need to weigh the pros and cons of a financial asset to make an informed decision. Similarly, to help you decide on opening a savings account, we are listing below the advantages and limitations of savings accounts in Kuwait that you should know beforehand:
Advantages of Savings Accounts
- Availability: Savings accounts are easy to open, and you can withdraw and deposit money anytime at ATMs or via 24-hour online access, unlike long-term investment accounts. Many institutions will allow you to link your savings account to other accounts, like a checking account, notice account, etc.
- Accessibility: Savings accounts deal in cash, which means you don’t have to worry about selling investments or making other complicated moves to access your money.
- Interest Earning: Although interest rates are moderate, you will still accrue interest over your deposit amount. The rates depend on various factors, including Kuwait’s economy, bank and savings account types.
- Minimal Eligibility: Many savings accounts can be started for just KD 500 or even less. There is generally no age limit, salary cut-off or other commitments to open a regular savings account in Kuwait.
- Automated Billing: Many banks allow bills to be paid automatically out of a savings account without being subjected to the withdrawal and transfer rules/charges, helping you avoid late fees or missed payments.
Disadvantages of Savings Accounts
While there are a number of advantages of opening a savings account, there are also some limitations with it, such as:
- Savings account interest rates are low and subject to change. So, it cannot be relied upon as a passive source of income
- Some banks require you to maintain a minimum balance for savings accounts. Otherwise, it will accrue charges
How to Open a Savings Account in Kuwait
Considering both sides of opening a savings account, we see that the positives weigh over the limitations. So, if you have made up your mind to open a regular savings account in Kuwait, what are the steps for it:
- You need to be at least 18 years of age
- If you want to open an account for your minor ward, you can name yourself the guardian
- A minimum opening balance of KD 500
- Note that different banks offer varying opening amounts
- You can be either a Kuwaiti or non-Kuwaiti with a valid residency
You need personal information documents like age proof, address proof and citizenship ID or passport.
In all methods, just share your personal information and deposit the minimum amount - the bank representative/tool will take care of opening the account and notify you.
How to Choose the Best Savings Account in Kuwait
When you have decided to open a savings account and look around in banks, you’ll realize that all banks are offering savings accounts. It can get overwhelming looking at each of their brochures to choose the best savings account in Kuwait. To make it easier for you, we’ve listed some important factors to consider below:
- Interest Rate: Compare the interest rates offered by different banks to ensure that you are getting the best return on your savings
- Minimum Balance: Some banks require a minimum balance to be maintained in the account, so make sure you are comfortable with the amount
- Fees: Check for any fees associated with the account, such as account maintenance fees or withdrawal fees
- Accessibility: Consider the bank's location and the availability of ATMs and online banking services
- Customer Service: Research the bank's customer service reputation and read customer reviews to get an idea of their level of service
Ultimately, it's important to do your research and compare the different options available to find the savings account that best suits your needs and preferences.
Opening a savings account is a smart and safe banking choice for individuals looking to save money and earn interest on their deposits. With various features, types and interest rates available, it is important to research and compare different options to find the best savings account in Kuwait that fits your needs. Overall, opening a savings account is a great step towards achieving your financial goals and securing your financial future.
What is the difference between savings and a current account?
Savings accounts are typically used for basic banking features and long-term savings goals. Current accounts, on the other hand, are designed for day-to-day transactions, such as paying bills and receiving payments.
How much do I need to open a bank account in Kuwait?
The minimum deposit to open a bank account in Kuwait varies between banks.
Can I have multiple savings accounts?
Yes, you can have multiple savings accounts with different banks or within the same bank. This can be useful if you want to separate your savings for different goals, such as a vacation fund and a down payment fund.
Is there a monthly fee for a savings account?
Some banks may charge a monthly fee for a savings account, while others may not. On the other hand, some banks may also waive the monthly fee if you maintain a certain balance in your account.
How do banks calculate monthly interest on a savings account?
Banks typically calculate interest on a savings account based on the account balance and interest rate. The interest rate is, in turn, based on various economic factors and internal policies.