The importance of having a bank account in any recognized financial institution can not be overemphasized. In addition to making financial transactions simple and safe, bank accounts also make it easier for you to get credit facilities. Whether they are individuals or businesses, banks and other financial institutions provide their clients with a variety of bank accounts to meet their specific needs. In this article, we look at the various types of bank accounts in Nigeria and their attributes.
Below are the different types of bank accounts in Nigeria and their characteristics:
The most often used type of bank account in Nigeria is a savings account. They must have a minimum opening deposit and can only be opened by individuals for their own use. Most Nigerian banks allow you to open a savings account for NGN 0; however, others may charge you a few thousand Naira. To avoid having monthly maintenance fees automatically withdrawn from your account, you might need to keep a minimum balance in your account. If you have a savings account with a bank in Nigeria, you can easily deposit money into it or withdraw it whenever you want (within legal restrictions), either online or by going to a local branch of the bank.
According to the NDIC Act of 2006, if you have a savings account with a financial institution that is a member of the Nigeria Deposit Insurance Corporation (NDIC), you are guaranteed the payment of deposits in the event that your bank is unable to do so. Additionally, in accordance with the Central Bank of Nigeria’s regulations, you have the right to receive interest at a rate of at least 1.25 percent. In addition to the low interest rates, restrictions on savings accounts also include daily withdrawal limits and a ceiling on the maximum amount of money that can be held in an account (varies from bank to bank). You cannot overdraw your savings account in Nigeria and use the check facilities.
Current accounts are a form of bank account that are frequently run by businesses, organizations, cooperative societies, etc. This kind of account can be owned and used by those who want to budget and manage their money as well. You have the right to experience a level of freedom that other bank accounts do not offer as a current account holder. A current account allows for unlimited withdrawals and deposits each day, which streamlines corporate operations. Additionally, having a current gives you the ability to overdraw your account whenever you want and to issue checks and pay orders.
Comparing current account management to other bank account management is useful. You must maintain a running balance on your current account every day and balance your checkbooks on a regular basis as a current account customer (monthly or stated otherwise by the bank you have an account with). It is simpler to understand how to file taxes appropriately because you are in control of maintaining your current account. There is a daily cap on the amount of money you can remove from your current account, despite the promise of unlimited withdrawals per day.
FIXED DEPOSIT ACCOUNT
Fixed deposit bank accounts are a specific kind of bank account that promise greater returns on savings over a predetermined time frame, typically 30 days to 180 days or more. Although fixed deposit accounts offer higher interest rates than conventional savings accounts, withdrawals are subject to WHT (Withholding Tax). You must have and manage a current account with the financial institution you desire to save with in order to operate a fixed deposit account.
Each bank has a minimum deposit amount that must be made in order to open a fixed deposit account. Depending on what you desire, you can choose to reinvest in another fixed-term deposit or receive the original amount plus interest that has accumulated during the term. Additionally, you can manage several fixed deposit accounts simultaneously.
The main difference between a joint account and a regular bank account is that it is owned and accessible by more than one individual. Business partners, families, or couples who have some level of trust between them may be the parties engaged in opening and keeping a joint account. The money in such an account is available to anyone listed on it.
For the long run, for example between couples looking to pool their resources, or on a temporary basis, a joint account can be opened. When opening a joint account, two people have the option of being named with either “and” or “or” between their names. This classification implies that both parties must sign in order to access the funds in a joint account with a “and” between all those names of the joint account holders. An “or” account, on the other hand, enables either account holder to access the funds even without consent of the other person.
A bank account known as a “domiciliary account” enables you to conduct transactions in a currency other than the naira. You may save money, pay for an online degree from a foreign university, get remittances directly into your account, and do a lot more with a domiciliary account. Anyone in Nigeria who has a Verification Number (BVN) is qualified to open and manage a dom account, provided they also possess the other necessary documentation. Businesses with a Nigerian corporate domicile may also run a domiciliary account.
NON-RESIDENT NIGERIAN ACCOUNT
If you’re a Nigerian who lives overseas but yet wants to keep a Nigerian bank account, you can open a non-resident Nigerian account. You can open an NRN account with any Nigerian bank from any part of the globe as long as the necessary documentation is in order.
Corporate account is also known as business account. For business entities, companies or corporations to receive and store their business proceeds, a 10-digit NUBAN account was formed. A firm or other business entity can transfer money abroad from Nigeria via a corporate account. A board resolution, two references, two pieces of valid identification for directors and signatories, bank verification numbers (BVNs) for directors and signatories, proofs of address, passports for signatories, tax identification numbers (TINs), and other pertinent licenses are among the documents needed to open a corporate account.