What is the best currency to carry while in UAE?

Venturing into the dazzling landscape of the United Arab Emirates prompts a natural question: what’s the smartest way to manage your money and which currency will serve you best in this land of luxury and innovation? The answer is quite straightforward, making your financial transactions as smooth as the desert sands. This comprehensive guide, meticulously compiled by the www.few.ae team, will demystify currency usage in the UAE, ensuring you navigate your finances with confidence and ease.

The Official Currency: UAE Dirham (AED)

The United Arab Emirates Dirham (AED), often abbreviated as Dh or Dhs, is the official currency of the UAE. It’s subdivided into 100 fils, though smaller fils denominations (like 1, 5, 10 fils coins) are rarely used in everyday transactions. Understanding this is your first step to a hassle-free financial experience. The AED has been pegged to the U.S. Dollar (USD) since 1997 at a fixed rate of 1 USD = 3.6725 AED. This peg provides remarkable stability, meaning the exchange rate between USD and AED remains constant, offering predictability for visitors from the United States or those holding USD.

This stability is a significant advantage, particularly for travelers from the US, as it removes the uncertainty of fluctuating exchange rates. Even if your home currency isn’t USD, its stability against the dollar often provides a reliable benchmark for conversion. This fixed exchange rate policy by the Central Bank of the UAE helps maintain economic stability, especially given the country’s reliance on oil, which is priced in USD globally.

Credit and Debit Cards: Your Best Friends

In today’s highly modern and technologically advanced UAE, credit cards and debit cards are widely accepted for almost all transactions, from shopping in sprawling malls to dining at high-end restaurants, paying for taxis, and even in smaller shops. Major international card networks like Visa and Mastercard are universally recognized.

• Convenience and Security: Using cards offers immense convenience, eliminating the need to carry large amounts of cash. It also provides a layer of security, as lost or stolen cards can be quickly cancelled. Many establishments in Dubai and Abu Dhabi now offer contactless payment options, making transactions even faster.
• Dynamic Currency Conversion (DCC): Here’s a crucial tip: when paying with your credit or debit card, you might be asked if you want to pay in AED or your home currency. Always choose to pay in AED (local currency). If you opt for your home currency, the merchant or ATM uses Dynamic Currency Conversion (DCC), which often comes with an unfavorable exchange rate and hidden fees. By choosing AED, your bank or card provider handles the conversion, usually at a much better rate.
• Foreign Transaction Fees: Be aware that your home bank or card issuer might charge foreign transaction fees (typically around 1% to 3% of the transaction amount) for purchases made in a foreign currency. Check with your bank before you travel to understand these fees. Some travel-specific credit cards offer zero foreign transaction fees, making them ideal for international travel.

Cash: Essential for Smaller Transactions and Local Experiences

While cards reign supreme, carrying a modest amount of UAE Dirhams in cash is still highly recommended for several situations.

• Taxis and Public Transport: While many taxis accept cards, having cash for smaller fares or when a card machine isn’t working can be very useful. Public transport, like the Dubai Metro, uses rechargeable Nol cards, which can be topped up with cash or card.
• Souks and Traditional Markets: In bustling souks like the Gold Souk or Spice Souk, cash can be king, especially if you plan on bargaining for goods. While some vendors might accept cards, cash offers more flexibility and leverage in negotiations.
• Small Shops and Cafes: Smaller, independent shops, local cafes, or street food vendors might prefer or only accept cash.
• Tipping: While service charges are often included in restaurant bills, it’s customary to leave a small cash tip for excellent service in restaurants, hotels, and for taxi drivers. For approximate tipping etiquette, a small amount like AED 5 to AED 10 for a taxi driver or a small percentage of the bill at a restaurant (even if a service charge is included) is appreciated.

Where to Exchange Currency

When it comes to exchanging your foreign currency into AED, you have several reliable options:

• Exchange Houses: These are generally your best bet for competitive exchange rates and lower fees compared to banks or airports. Reputable exchange houses like Al Ansari Exchange, LuLu Exchange, Al Fardan Exchange, and Sharaf Exchange have numerous branches in malls, commercial areas, and tourist hotspots across the UAE. They offer transparent rates and efficient service.
• Banks: Major banks like Emirates NBD, FAB, and ADCB also offer currency exchange services. Their rates are typically less competitive than exchange houses, and they might charge a commission fee.
• Airports and Hotels: While convenient, exchanging currency at airports or hotels is generally not recommended due to less favorable exchange rates and higher fees. They offer convenience at a premium.

ATMs and Cash Withdrawals

ATMs are ubiquitous in the UAE, found in malls, hotels, airports, and street corners, making it easy to withdraw cash.

• Fees: Be aware of potential fees. Your home bank might charge an international ATM withdrawal fee, and the local UAE bank operating the ATM might also levy a charge. Typical ATM fees for foreign cardholders in the UAE can range from approximately AED 22 to AED 26.26 per transaction. Some international banks have partnerships that allow for fee-free withdrawals, so check with your bank before traveling.
• DCC at ATMs: Just like with card payments, if an ATM asks you to complete the transaction in your home currency, always decline and choose to proceed in AED. This avoids unfavorable DCC rates.
• Withdrawal Limits: ATMs typically have daily withdrawal limits, both set by the local bank and potentially by your home bank. Plan accordingly if you need larger amounts of cash.

Alternative Payment Methods and Budgeting

• Multi-Currency Travel Cards: Consider prepaid multi-currency travel cards (like those offered by Wise or Revolut, though direct AED loading might vary) that allow you to load funds in various currencies, including AED, locking in exchange rates beforehand and potentially avoiding foreign transaction fees.
• Digital Wallets: Mobile payment apps like Apple Pay, Google Pay, and Samsung Pay are widely accepted at most retail outlets, offering a secure and convenient way to pay using your smartphone or smartwatch.
• Budgeting for Daily Expenses: For a comfortable visit, a tourist might typically spend an average of AED 200 to AED 500 per person per day on food, transport, and casual shopping, excluding major excursions or luxury purchases. This is a very rough estimate and can vary significantly based on your spending habits and preferences. Accommodation costs are separate.

In conclusion, while the UAE Dirham is the only currency accepted for direct payment, a combination of widely accepted credit/debit cards and a modest amount of cash is the most practical approach for tourists. Prioritizing card usage while declining DCC, and exchanging larger sums at reputable exchange houses, will ensure you get the best value for your money during your incredible journey through the Emirates. Do you have a preference for cash or card use, or perhaps a mix of both when you travel?