Did you know that not everyone knows all there is to know about the major types of bank accounts in Nigeria?
Not quite long, we made post on the types of banks in Nigeria, with features and functions of each. Now, this article will be about types of bank accounts.
What Is a Bank Account?
A bank account is a financial account maintained by a bank for a customer. It represents a person’s money held in the bank.
In other words, a bank account represents the funds that a customer has entrusted to the financial institution and from which the customer can make withdrawals.
All Types of Bank Accounts In Nigeria
There are 7 types of bank accounts operated in Nigeria namely;
- Savings Account
- Current Account
- Fixed Deposit Account
- Joint Account
- Corporate Account
- Domiciliary Account
- Non-resident Nigerian Account
Now, we’ll take the first 4 types of bank accounts in Nigeria.
4 Types of Bank Accounts Explained
If you don’t have a bank account in Nigeria, you are…… (you know how to complete that *winks). Online banking in Nigeria has made things easy isn’t it?
Opening and operating a bank account is always the order of the day in every of the banks in Nigeria today.
Salary earners who want to receive their monthly paycheck need bank accounts. So also are business owners who want to receive payment for goods and services provided.
More direct, people now open new bank account in Nigeria every day and this will continue as the population of Nigeria continues to grow.
Come to think of it, personal bank account has made it possible for many Nigerians to secure online loans fast.
In fact, some people have more than two bank accounts in Nigeria, each serving a different purpose, either for savings or daily transactions.
Read our guide on how to develop a good saving habit, that will help you become more financially responsible.
Without Further ado, let’s start to compare bank accounts in Nigeria and their respective features.
1. Savings Account
A savings bank account is the most common type of bank account in Nigeria and everywhere in the world, as it encourages low income earners to form or develop a saving habit.
Savings account is a type of bank account that is operated with passbook rather than cheques. Owners or holders of savings account are paid interest for keeping their money with commercial banks.
For example, Zenith bank individual savings account grants you 4.2% interest rate, and offers zero account opening balance.
It is more or less a savings and withdrawals account, which makes some kind of transactions impossible.
Summary Features of Savings Account:
- Money can only be withdrawn occasionally if interest is to be paid
- It attracts favorable interest rate
- Holders are issued passbook (I know you’r wondering, in this age, do banks still give passbooks?)
- Withdrawals cannot be made by another person on behalf of the customer
2. Current Account
On the list of types of bank accounts in Nigeria is the Current Account. It is simply an account on which cheques are drawn.
A current account is usually operated by businessmen and organizations, and is required if a customer wishes to make payment through cheques.
Learn more about cheques and understand the 8 different types of cheques in this post.
Here, a customer is free to withdraw money on demand as he will be given a cheque book. Holders of current account can obtain loans and overdrafts from the bank.
Summary Features of Current bank accounts:
- Money can be withdrawn frequently
- Holders of current account are not entitled to interest on savings.
- Customers are entitled to the use of cheque book
- Payment of commission is made by the customer to the bank
- Other people can withdraw money from the account on behalf of the customer.
3. Fixed Deposit Account In Nigeria
Fixed deposit accounts are one of the major types of bank accounts in Nigeria. It is also called time account deposit.
Fixed deposit account is a type of account that is usually operated by individuals and organizations who have excess liquidity.
It is one in which money is saved by the customer for a stated period such as a year, two year or more. So, withdrawals cannot be made anyhow.
This type of bank account grants the holders higher interest than a savings account, and customers can withdraw subject to notice.
A fixed bank account is opened majorly for a specific purpose and it can be renewed on maturity. With this account, a customer is issued a passbook.
Summary features of Fixed Deposit Account:
- Money is deposited and saved in the account for a specified period of time as chosen by the customer. (Note: the minimum period is 30 days)
- It attracts a higher interest rate
- 7 days notice must be given before withdrawal.
4. Joint Bank Account
The joint account is also one of the popular types of bank accounts in Nigeria. It is an ccount opened with the name of two or more people who are all signatories to the account.
From its name, two or more individuals in the eyes of the law, are regarded as the owner of the account. So, all parties to the account are signatories to the account.
Couples, where are you?
Joint account are of two types in which one is majorly opened by couples;
- Tenants-in-common – (opened by business partners)
- Joint tenancy account (opened by couples)
Now you have grasped the features of the first 4 types of bank accounts in Nigeria. We have 3 to go isn’t it?
The Remaining 3 different types of bank accounts and their features
At this point, you may be wondering, which are the best bank accounts someone can open?
Well, it all depends on your needs. Checking out the features of each of the bank account types on this page will help you make the best decision.
5. Corporate Account
So, what is a corporate bank account?
A corporate account is simply a business account, opened soley by companies or corporations (private or public limited liability companies), with a huge turnover, for business purposes.
To open a corporate account in Nigeria, you will need the following documents:
- 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
You’ll have to fill the corporate account form presented to you by your bank and must also present the documents listed above.
Next, you will make a payment of 5,000 Naira. This payment is to verify that your certificate of incorporation is valid.
6. Domiciliary Account
A domiciliary account is a bank account opened in Nigeria which allows its user to make transactions in foreign currencies.
In other words, you to fund a DOM account with foreign currencies such as dollars, pounds or euros and enables you to do foreign transactions on that account.
You can send money to other countries with a domiciliary account and also receive money from other countries with it.
- A savings domiciliary bank account is a foreign currency account that allows the person to save money in foreign currencies and be able to withdraw it using a bank teller.
- A current domiciliary bank account on the other hand, is like a current account, and businesses or businesspersons normally use it.
8. Non-Resident Nigerian Account
A Non-Resident Nigerian account is a bank account opened by Nigerians living outside Nigeria, who at the same time can enjoy the services of their home bank.
This premium service offers Nigerians in Diaspora the opportunity to open and operate a Nigerian bank account from anywhere in the world.
Some of the services include Savings and Current accounts, Investment in Money Market instruments and eBanking services.
See this video by GTbank on how to open an NRN account.
There you have it, the 7 major types of bank accounts in commercial banks.
Types of banks in Nigeria
So, what are the types of banks in Nigeria?
I have given a detailed post on the major types of banks in Nigeria here. In the article, you’ll learn more about the origin of banks, mortgage banks, development banks, commercial banks, merchant banks, etc.
Types of Bank Accounts in Nigeria (Summary)
There you have the types of bank accounts in Nigeria explained in detail. Today, people now open bank account online as banks keep breaking grounds with technology.
Different bank account types have different features and serve different purposes, so you’ll need to understand each and decide on what’s best for you.
I’ve been wondering, how many bank accounts should a Nigerian have? Let me hear from you. Please the comment box below.