Bank accounts are safe to keep your money, easy to perform financial transactions, as well as help you access credit facilities, and much more. Banks and other financial institutions offer their customers several types of bank accounts suited for their unique needs, whether they be individuals or business entities. In this article, we’ll discuss the types of bank accounts in Nigeria and their features.
The types of bank accounts in Nigeria would be discussed below:
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Savings Account
Savings accounts are the most commonly operated type of bank account in Nigeria. They can only be opened by individuals for their personal use, and require a minimum opening deposit to have one. You can open a savings account in most banks in Nigeria with NGN 0.00, while some would require a few thousand Naira. However, you may need to maintain a minimum balance or monthly maintenance fees would be deducted from your account at routine intervals. As a savings account holder in Nigeria, you can easily make deposits or withdraw money (within federal limits) whenever you desire, whether online or by visiting your bank’s branch near you.
As a savings account holder in a financial institution that is part of the Nigeria Deposit Insurance Corporation (NDIC), you are guaranteed the payments of deposits in the event of your bank not being able to pay up, as stipulated by the NDIC Act 2006. Additionally, you’re entitled to receive an interest rate of at least 1.25% as per the directives of the Central Bank of Nigeria. Asides from the low-interest rates of saving accounts, other constraints of savings accounts are the limits on withdrawals you can make in a day and a benchmark of the total amount of money your account can hold (varies from bank to bank). As a savings account holder in Nigeria, you aren’t qualified to overdraw and enjoy cheque facilities.
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Current Account
A current account, or demand deposit account, is a type of bank account that’s usually operated by business people, firms, cooperative societies, etc. Individuals that also desire to plan and manage their funds can also own and operate this type of account. As a current account holder, you are entitled to enjoy some degree of freedom that other types of bank accounts do not provide. A current account gives you the freedom to make as many withdrawals or deposits in a day, which makes business transactions run smoothly. Also, having a current allows you to issue cheques, pay orders, and also the opportunity to overdraw at any given time.
Operating a current account differs from other types of bank accounts. As a current account holder, you are expected to keep a running balance every day and balance your cheque books at routine intervals (monthly or otherwise stated by the financial institution you bank with). Since you are in charge of managing your current account, it makes learning how to file taxes correctly easier. Though having a current account promises an unlimited number of withdrawals per day, there’s a limit to the funds that you can take out from your account in a day.
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Fixed Deposit Account
A deposit bank account is a type of bank account that guarantees higher returns on savings over a fixed period, usually 30 days to 180 days, or more. The interest rates on fixed deposit accounts are higher than the traditional savings account but are subject to WHT (Withholding Tax) at the time of withdrawal. To operate a fixed deposit account, you need to own and operate a current account with the financial institution you wish to save with. Every bank has a minimum amount that is required for investing in a fixed deposit account with them. At the end of the tenure of the fixed deposit, you may reinvest in another tenure or get the amount put in plus the interest accrued over the timeframe, depending on what you want. You can also operate multiple fixed deposit accounts at a time.
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Joint Account
Joint accounts are pretty much like every other standard bank account only that more than one person owns and has access to it. The parties involved in opening and maintaining a joint account may be business partners, families or couples with a degree of trust in each other. Anyone named on such an account can access the funds therein.
A joint account can be created for the long-haul such as between couples who wish to merge resources or on a short-term basis. When two people open a joint account, they can choose to be named with an “and” or an “or” between their names. The implication of this classification is that; in a joint account with an “and” between the names of the account holders, the funds can only be accessed if both parties append their signatures. On the other hand, an “or ” account allows either of the account holders to have access to the funds without the approval of the other individual.
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Domiciliary Account
A domiciliary account is a bank account that allows you to perform transactions in a foreign currency other than the Naira. With a domiciliary account, you can receive remittances directly into your account, pay for an online degree from a university abroad, or save, and much more. Anyone with a Verification Number (BVN) in Nigeria is eligible to own and operate a dom account as long as they have the other requisite documents. Business corporations domiciled in Nigeria are also eligible to operate a domiciliary account.
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Corporate Account
This is a 10-digit NUBAN account created for business entities or corporations to receive and hold their business proceeds. A corporate account also allows a company or business entity to send funds from Nigeria to other countries. The documents required to open a corporate account include; CAC documents, valid identification of directors and signatories, bank verification number (BVN) of directors and signatories, proof of address, passport of signatories, tax identification number (TIN), board resolution, two references, and other relevant licenses.
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Non-Resident Nigerian Account
A Non-Resident Nigerian account is a type of bank account designed specifically for Nigerians who live abroad but want to maintain a Nigerian bank account. As long as the requisite documents are intact, you can open an NRN with any Nigerian bank from anywhere in the world.