In the years past, people had reservations about having accounts with Nigerian Banks. There were several cases of banks closing down, trapping people’s funds without any hope of getting them back. In those days many people lost their entire fortunes, and some died penniless and hopeless. In recent years, however, many changes have come into place in the Nigerian Banking Industry, leading to more stability and subsequently more trust from the people into the Nigerian banking system.
With the pace of development in the trade and commerce sector of the Nigerian economy, however, having a bank account is more of a necessity than an option. Banks save people the stress of traveling long and dangerous routes, loaded with cash. Banks now offer better security of deposited funds, and some Nigerian banks offer account options that actually pay the account holder a small percentage as monthly interest.
If you are a big businessman, or a small trader, or a married couple, or a student, there is a bank account suitable for your individual needs. As a matter of fact, there are even bank accounts for small children, as a kind of future savings scheme for them, which they can benefit from when they become of age.
As stated earlier in this article there are different types of bank accounts that may suit your needs. Now let us take a look at some of them so that you can have an idea before going into a banking hall, so as to avoid looking all confused. Below are the different types of Bank accounts operated in Nigeria.
Types of Bank Accounts in Nigeria
- Savings Account
- Current Account
- Fixed Deposit Account
- Joint Account
- Domiciliary Account
- Corporate Account
- Non-resident Account
This is the most common and popular type of account in Nigeria. It is the basic account most people operate. In fact, if you walk into a bank and say you want to open an account they will immediately assume that you want a savings account. Some characteristics of a savings account in Nigeria are: The account is just for deposits and withdrawals, by one person. There is a cap (in most banks ) on the maximum amount this account can handle. There are no third party withdrawals of any kind, the banks usually give a very small percentage every month as interest. Very little cash is required to open this kind of account, and some banks do not even require you to deposit any money immediately.
This is the second most popular type of bank account in Nigeria and is more common among businessmen, high net-worth individuals, and rich people. The characteristics of Current Accounts are: On opening this type of account you are issued a cheque book which means you can make third-party withdrawals if you need to pay for goods or services.
Furthermore, you can save several millions of naira in this account (although it is advisable that you do not pay the money at once) because transactions on this account are limitless, and thirdly it is important to note that instead of paying you a monthly interest it is the bank that will charge you monthly handling fee. Unless you are handling huge amounts of money it is advisable that you leave this option alone and go for savings accounts.
A fixed deposit is a kind of investment, rather than a true bank account. This is how it works: You pay an amount of money into the account, and until the expiration of the agreed tenure you do not have access to the money. This account is for a fixed period of time, a minimum period of 30 days and a maximum period of 180 days, after which you may now withdraw the money or elect to leave it for a higher tenure. The major benefit of this type of account is that individuals or corporate bodies who use this kind of accounts do it to earn high interest on money invested, as this is the type of account with the most interest payout. Furthermore, money is safe because it will not be spent on unnecessary things.
A joint account is a type of account that is opened with the name of two or more people who agree to own and operate the account together for the purpose of trust and transparency. Therefore, the parties are all signatories to the account, and so no single person can make a decision on a joint account without informing the other signatory or signatories. As the withdrawal or transfer request will most likely not be honoured.
There are two types of joint accounts
- Joint-tenancy: In this type of account the parties involved have an equal right to the funds, even though they may not deposit the same amount into the account. Furthermore, the distribution of the funds is stipulated in writing (could be a will) so that if any of the partners should die, the money is divided into two, and one part is sent to the estate of the deceased as stipulated in the agreement. This is mostly used by married couples.
- Tenants-in-common: This type of bank account is mostly operated by business partners, and means that though the funds are held together, there is unequal ownership of the funds in the account. Therefore, if one should die his estate would get his share of the funds, maybe 20 percent of the total funds, or 70 percent or whatever is his share of the money, as stipulated in the agreement given to the bank, which would also reflect his own share in the business.
A domiciliary account is a kind of account that is opened for carrying out foreign transactions. The account can be used to receive money from other countries or to send money to another country. This is not open to receive all foreign currencies however, it is programmed to receive money in one particular foreign currency such as dollar or pounds.
A corporate account is a kind of account that is opened by Registered businesses, by law and reason a registered business is treated as a legal entity that is separate from the founder, therefore bank transfers cannot be done with the name of the founder but rather with the name of the business or companies. Registered businesses, multinational companies, and big corporations mostly use this type of account. It is operated by whoever is in charge of the finances of the company and that is usually the owner, or someone close to the owner of the business, or in the case of multinational companies, someone sitting on the board.
Non-resident Nigerian Account
A Non-resident Nigerian account is a bank account designed for Nigerians who are living in foreign countries and want to operate a Nigerian bank account probably for the purpose of saving up some of their earnings so that when they return home they can have something to live on, or with which to invest.
Although it is true that many people still do not have bank accounts, but the trend is now changing because even elderly people in the hinterland are now having access to bank accounts with which they receive money from their children, many of whom are resident in the cities, or in other countries.
Please keep in mind that many banks have products that they have individually tailored and branded to their own tastes, for the apparent purpose of marketing. It is therefore important that you ask the customer care agents at the banks of your choice so as to get a better idea, in greater detail about the types of accounts offered at a particular bank.
Tag: Types Of Bank Accounts In Nigeria.