It is not everybody in Nigeria that knows all the information about the types of bank accounts that are operated in the country. In this article, we will be discussing the 7 major types of bank accounts in Nigeria and all you should know. In this new age and era, you have to have a bank account you operate in Nigeria.
Most times you find out that parents open bank accounts for their children. Some parents go as far as opening bank accounts for their unborn children. It is of note that when such accounts are opened, it is the parents that manage them. At such a tender age, the children do not have access to bank accounts. Major Types Of Bank Accounts In Nigeria
Most adults don’t have bank accounts in Nigeria. It is very easy now that you can even open a bank account online with your mobile device without going to the bank. Everyone needs a bank account to enable them to carry out their financial transactions. But if you have the time and opportunity, you can walk into any banking hall and find out the 8 major types of bank accounts and all you should know. This will help you select the type of bank account that will suit you and be convenient for you to manage.
Before you walk into the banking hall to make enquiries about the type of bank account to open, we will help by giving you the list of the 7 major types of bank accounts in Nigeria. This information will serve as a clue so that you don’t get confused.
What Is A Bank Account?
A bank account can be described as a financial account kept by the bank for a customer. The bank can be either a commercial bank, retail bank, cooperative bank, Investment bank etc. This is where the money deposited by an individual is kept in the bank. The account holder will be given an account number and name.
A Bank account can be said to be the funds or money that an account holder referred to as a customer entrusts in the hands of the financial institution and from which further deposits and withdrawals can be made.
List Of 7 Major Types Of Bank Account In Nigeria
There are 7 major types of bank accounts in Nigeria that citizens can open and operate. They are as follows:
- Savings Account
- Current Account
- Fixed Deposit Account
- Joint Account
- Domiciliary Account
- Corporate Account
- Non -Resident Account
A savings account is the most common and among the major types of bank accounts in Nigeria. It is the basic account that people operate in Nigeria and globally. It helps in encouraging low-income earners and others without income to develop the habit of having personal savings in their bank accounts.
The savings account is operated with a passbook and has a minimum balance that must be in the account at the time. The account holder is allowed to withdraw from the bank account in person, Third parties are not allowed to make any withdrawals from a savings account. The holders or owners of a savings account are paid interest monthly for keeping their money in the bank, although the interest rates are always very low. It is mainly used for savings and withdrawals thereby making some transactions in the account impossible.
Features Of A Savings Account
- You can withdraw your money occasionally so that interest will be paid.
- Savings account attracts favourable interest rate.
- Savings account holders are issued passbooks or withdrawal slips as the case may be.
- A third party cannot be allowed to withdraw money from the account on behalf of the account owner.
Current accounts are also one of the major types of bank accounts in Nigeria. It can also be described as a Demand Deposit Account. This type of account is usually operated and preferred by business owners because there is no restriction on the transactions you can carry out on the current account. Unlike savings accounts that are operated using a passbook or withdrawal slip, a current account holder uses a chequebook. Chequebooks are issued after the account is opened and can also enable a third party to withdraw from the account.
The owners of a current account are free to withdraw money on demand from the current account using the cheque or even issue a cheque to a third party for withdrawals. There is no monthly interest accruing to the account but rather, there is a charge attached to any deposits and withdrawals made on the current accounts.
Features Of Current Accounts
- You can withdraw your money as many times as you want without restrictions.
- Individuals or cooperate organizations that operate a current account are not entitled to monthly interest on savings.
- Account holders are entitled to the use of cheque book for their accounts.
- Payment of commission is made by the account holder to the bank.
- Third parties can withdraw money from the account on behalf of the customer using cheques.
Fixed Deposit Account
This is one of the major types of bank accounts in Nigeria that is usually operated by individuals and organisations who have excess cash in their possession and looking for how to earn high interest on the excess cash they invested. A fixed deposit account is also referred to as a TIME ACCOUNT DEPOSIT. This is because money is fixed in the account for a specified period minimum of thirty (30) days and a maximum of one hundred and eighty (180) days.
During the period that the money is deposited and fixed, there will be no withdrawals from the account until the expiration of the specified period as stated. Any withdrawal will attract a loss of some of the interest accruing from the deposit and some percentage of the funds invested depending on the initial terms and conditions given.
The fixed deposit account holders earn higher interest compared to savings account holders. You can withdraw from the account subject to notice and approvals. But it should be noted that any withdrawal will attract a loss of some of the interest accruing from the deposit and some percentage of the funds invested depending on the initial terms and conditions given. This type of account is always opened for a specific purpose and can be renewed at the maturity date.
Features Of A Fixed Deposit Account
- The fixed deposit account allows account holders to deposit and save money in the account for a specified period as chosen by the customer.
- This type of account attracts a higher interest rate.
- Account holders are expected to give the bank 7 days’ notice before withdrawal.
A joint account is among the major types of bank accounts in Nigeria that are opened with the name of two or more people who will all be signatories to the account. It can be either a current or a savings account but must be jointly owned. The two or more people that jointly own the account are regarded as the legal owner of the account.
There are two major types of Joint accounts operated in Nigeria. They are:
- Joint Tenancy Account: This type of account is mostly operated by married couples.
- Tenants in common: This type of account is operated by business partners.
Corporate account is among the major types of bank accounts in Nigeria mainly operated for business purposes, corporation or companies (private or public limited liability companies) and multinational companies with large turnover for their day-to-day operations. This type of account is different from investment and personal bank accounts. It helps to protect the personal funds of the owners of the business in case of business failure and litigation.
The following are the documents that will be required before a corporate account can be opened in Nigerian banks.
- Certificate of Incorporation
- Tax Identification Number (TIN)
- SCUML Certificate or Letter of Exemption
- Valid IDs of Directors (photocopies)
- Passport photo of each account signatory
- Board Resolution
After providing the original copies of the above documents listed above, the bank will give a corporate account opening to be filled. A deposit of five thousand (#5,000) will be made which will be used to verify that the certificate of incorporation provided is valid.
This is also one of the major types of bank accounts in Nigeria and other African countries that are mainly opened for foreign currency transactions. The Domiciliary account can be used to send money to other countries and also to receive money from other countries without any hitch. This account allows its users to carry out transactions in foreign currencies in Nigeria. With this, you can fund your account with foreign currencies like pounds, euros and dollars.
A Domiciliary account can be either savings or a current domiciliary account.
A savings domiciliary bank account is a foreign currency that enables the account holder to save money in foreign currencies and will be allowed to withdraw from the account using a bank teller.
On the other hand, a current domiciliary bank account is like a normal current account and can be used by business owners or corporations.
Non-Residents Nigerian Account
This type of account is opened and operated by Nigerians living abroad but want to operate a Nigerian bank account they can operate from anywhere in the world. It is similar to a domiciliary account but with a little difference.
This article has explained the major types of bank accounts in Nigeria in detail. There are other types of accounts which was not mentioned here. But a visit to any of the financial institutions will help you to gather more knowledge of this topic.