Some UAE Banks to Raise Minimum Balance Requirement Starting June 1

Starting from June 1, 2025, several banks in the UAE will be increasing the minimum balance on personal bank accounts. The current minimum balance threshold of AED 3,000 will increase to AED 5,000, and this adjustment would affect a wide range of customers, mainly lower-income earners.

Setting a new minimum balance is one of several changes that are part of an effort to regularize operations in the case of a regulatory update, improve a bank’s own profitability, provide better cost distribution, and establish a more efficient banking operational model. 

While this is an excellent option for banks and creative financial institutions, some concern is being raised by finance professionals and affected customers alike. Thus, some customers and owners of small businesses will look at alternate options, like options to open business account in Dubai, which offers more features or a lower minimum account balance.

What is Changing?

Earlier in 2011, most banks in the UAE required personal account holders to hold a minimum of AED 3,000 in their accounts monthly to avoid a penalty charge of AED 25. This requirement was particularly applicable to customers without credit cards, overdrafts, or personal loan situations. 

Based on the new structure, starting on June 1, 2025, banks will require a minimum of AED 5,000 in your account monthly. Any customers who do not maintain this requirement will incur a monthly charge of AED 25 unless they meet an exemption. One bank has already implemented the amended requirement before the date set by the relevant associations. However, having products such as a bank loan in Dubai can also assist customers in avoiding these new penalties and make way for an exemption.

Exemptions to the New Charges

Banks have provided the following list of requirements to eliminate the AED 25 charge: 

• Keep a total balance across all accounts of AED 20,000 or more
• Have a salary transfer of AED 15,000 or more each month
• Have a salary between AED 5,000 and AED 14,999 and have one of the products with the same bank:  a credit card, an overdraft, or A personal loan

If a person has a salary between AED 5,000 and AED 14,999 and does not have a linked product will need to pay the AED 25 monthly fee. Any person with a salary under AED 5,000 and no linked products will pay an even bigger charge of between AED 100 to AED 105 monthly, depending on their account type.

What Banking Industry Have to Say About This Change?

Vijay Valecha, Chief Investment Officer at Century Financial, said that the revised balance is also part of the banking industry’s risk management. He said, “A minimum balance guarantees that accounts remain active and eligible for advantages like interest. It also allows banks to monitor their capital reserves and comply with the regulatory requirements,”.

Valecha further explained that larger deposits enhance the ability of banks to provide bank loan in Dubai, which highlights the bank’s profit-making capacity. This notes that the higher threshold could also assist banks in recovering their operating costs and not carrying the weight of low-balance accounts.

Concerns from Financial Experts

As the banking explanation is understandable, finance experts have raised concerns at the social side of the policy, particularly the effects on low-income earners.  Dr Ben Lebig, a finance expert who provides advice for overseas workers, said many of the residents who work in the services industry, particularly expatriate workers, do not earn enough to meet the new threshold adequately. 

“For workers whose pay only just covers their basic living expenses and remittances, this obligation will become almost unachievable,” he said. Dr. Lebig warned that the policy could force people to start reducing their critical expenditures or go into unnecessary debt, such as credit cards or loans, to escape fees. Some will opt for a more flexible banking model, such as starting a business bank account in Dubai, as there are different requirements and benefits associated with the account type.

Alternative Options for Employees and Employers

To prepare for the upcoming modifications in minimum balance requirements, here are a few alternative options open to both employers and employees:

1. Payroll Cards

Payroll cards are issued through financial institutions or exchange houses under the UAE’s Wage Protection System (WPS). These cards:

• Provide unlimited withdrawals from ATMs
• Have no issuance fee
• Have the highest acceptance rate in the UAE

2. Corporate Accounts with Prepaid Salary Cards

These accounts have no minimum balance and do not require the employee to have a bank account. It also completely avoids the minimum balance entirely. 

3. Digital Banking Services

Digital banking solutions offer fee-free and zero-balance accounts, which are the best for low-wage workers who want more freedom in managing their money. 

4. Open a Business Bank Account in Dubai

A business bank account in Dubai can have different terms and benefits from a personal account. Also, it can be an opportunity to be strategic for freelancers, business owners, or contractors impacted by the new policy.

What Should You Do?

If you are an account holder in the UAE, here are some actions you should consider taking before June 1:

• Check your existing account balance to see if it meets the AED 5,000 condition.
• Read through the eligibility criteria for exemption based on your salary or linked financial products.
• Consider applying for a credit card or a bank loan in Dubai at your bank if it would allow you to be exempt from the new fee structure.
• Contact your bank to understand how your specific account type will be impacted.
• You can also look into other banking options like payroll cards, digital banks, or zero-balance accounts.

Coping Up With The Changes

UAE banks are preparing to implement higher minimum balance requirements, which will affect the financial lives of many residents. As increasing the minimum required balance to reflect the total cost of regulatory compliance and recovery costs may be necessary, the impact on low-income workers’ lives could be threatening.

Customers should take steps now by changing their banking structure or finding a more versatile solution to make sure that they can avoid penalties and keep away from being financially weak.