Different Types of Bank Accounts in Nigeria

Exploring Nigeria’s Banking Scene: A Guide to the Different Kinds of Accounts

Of course, the banks were playing a major role in the economy of Nigeria as it continues to change. It is important to make an account with a bank; therefore, knowledge on the types and existence of accounts is vital. In this guide, one can find various types of accounts available, what those accounts bear, and the elements they have, and lastly, suitable customers in the country.

The Main Types of Accounts for People:

Personal banking in Nigeria revolves around several pivotal accounTypes. Each intends to fulfill different monetary needs and cater to various segments of the population.

1. Current accounts:

Aim: These are customers designed to have a lot of cash move, such as depositing cash, withdrawing, transferring, and writing checks. It would work best for individuals or businesses that do a lot of transactions.

What you will get:

– Checkbooks: A means of payment through checks.

– Debit cards: These allow us to access ATMs and make payments to retailers.

– Internet and telephone banking: You can manage your funds from home.

– Overdrafts (provided they approved): You can borrow a small amount when you have run out of money.

– It accommodates more money movements: It is good for doing large transactions very often.

– You might pay fees: This is because you get the maximum service.

For whom:

– Employed persons with probably decent pay but frequent expenditures.

– So that business people can easily transact without limits.

– Cheque users.

– Overdraft facilities wanted.

* Types: Certain jobs or groups, for instance, have specific current accounts like student current accounts or elite current accounts that have benefits.

2. Savings Accounts:

* Purpose: These accounts accumulated one’s income and earns interest besides; they are very suitable for individuals who wish to keep money for emergency use or for set goals regarding saving.

* Features:

* Build up interest: The account accumulates interest on your balance at lower rates than fixed deposit accounts.

* Use with debit card: Withdraw at ATMs and purchase in stores.

* Online and mobile banking: Your account is accessible anywhere you are.

* Fewer transaction limitations: Compared to current accounts.

* Most of the time low or free to maintain: Therefore, it is open to hordes of people.

Who it is good for:

* Future need savers.

* The few students and young adults as new savers.

* Those savings will be limited by an account. However, they can live invest their money.

* Those who want access to their money.

* Goal-saving accounts: saving for a purpose such as school fees or travel.

* Child savings accounts: education for saving by children.

* Higher interest savings accounts: a reasonable interest on saving larger amount of money.

3. Domiciliary Accounts:

* Purpose: These accounts hold and pay foreign currencies like US Dollars, British Pounds, and Euros for persons and institutions dealing in foreign exchange.

* Characteristics:

* Foreign currency deposit and withdrawal: You can deposit and withdraw in foreign money.

* International transfers: You can transfer money to and from foreign countries.

* Debit card access (optional): Access to spending foreign currency with a card may be available.

* Adherence to foreign exchange regulations: Restrictions are imposed by the Central Bank of Nigeria (CBN) on the operation of such accounts.

Core beneficiaries:

* Receivers of funds from abroad via family or friends.

* Companies engaging in local transactions with their counterparts abroad.

* Individuals traveling often abroad.

* Any persons desirous of holding multiple currencies.

Caveats:

* Changing rates of exchange: Foreign currency appreciates or depreciates, hence affecting your holding.

* CBN regulations: There are stringent rules in respect of foreign currency transactions, which you are to observe and report accordingly.

4. Zero Balance Accounts:

– Purpose: These accounts help people of limited means to use banks more. They hardly charge (or are free) to maintain and do not require the customer to maintain a balance.

Features:

– Very low or no minimum balance required: easily accessible for someone that doesn’t have much cash to spare.

– Limited transactions: These assist in risk containment and prudent use of resources.

– Basic banking services: deposits, withdrawals, and transfers.

– Mostly with mobile banking applications: It leverages technology for users who might not be having bank access.

–Good fit for:

– A person who’s not making enough.

– A person without a bank account option or limited access to such.

– Anyone looking for cheap, no-frill banking.

Impact on Financial Inclusion:

These accounts are instrumental in pulling more people into the banking system. They cater to the basic banking needs of people who, before now, could not use the banks.

Special Accounts for Businesses:

Nigerian businesses need specialist accounts to properly handle their finances.

1. Current Corporate Accounts:

Aim: It is meant for all types of businesses for their cash movements.

Advantages:

* Facilitation of large business transactions owing to a high limit of transactions.

* Chequebook sub-packaging: This would enable a business to pay by cheques.

* Facility for online and mobile banking: Make it possible to access money anytime and anywhere.

* Business debit cards: to spend for the business.

* Access to business loans and credit (subject to approval).

* Personal account managers: Assist individually.

Good for:

* All registered businesses such as small shops or big companies.

* Companies processing thousands of transactions.

* Credit facilities are required by companies.

Paperwork Required: To open a business checking account, you need to provide more documents than for personal accounts. Business registration papers, tax ID numbers, and decisions taken by company board are some of the documents required.

Small Business Accounts:

Goal: Accounts tailored to assist small and medium businesses that are vital segments of Nigeria’s economy.

Its Contents:

* Less fee: Less than fees on corporate checking accounts.

* Bundle packages: It contains business consulting, learning opportunities, and networking with peers.

* Fewer documentation: Encourage small business owners to start accounts with less.

* Featured small business loans.

Beneficiaries:

* Small and medium enterprises.

* Startups and individuals starting new businesses.

* Small businesses which need help running their venture.

Small Business Aid:

This includes money management and avenues to funding with banks in partnership with government agencies and development organizations.

Seller Accounts:

* Objective: They are intended for enterprises that receive cash by means of cards or the internet such as shops with credit card terminals and e-commerce businesses.

Its Content:

* Online payment establishment: To allow payments made online.

* Card-machine support: Accepting card payments easily in the merchant’s shop.

* Transactions’ records and reconciliation: Having a list of the complete transactions.

* Chargebacks management: Addresses transactions having disputes.

Suitable for:

* Online retailers.

* Restaurants and cafes.

* Retail shops.

* Any business that accepts electronic payments.

Payment Ecosystem:

Merchant accounts are very important towards the Nigerian payment ecosystem as it grows with e-commerce and digital payment.

NGO and Non-Profit Planning Special Accounts:

Purpose: High for managing funds and receiving donations for non-profit and non-governmental organizations.

Functionalities:

* Transparency and Accountability: Assists in tracking and reporting funds.

* Donation Management Tools: Facilitates the receiving and managing of donations.

* Compliance to Regulatory Requirements: Ensures observance of all rules and regulations.

* Reduced Fees or Special Rates: Recognizes the non-profit nature of the organization.

Applicability:

* Registered NGO and Non Profit Organizations.

* Charitable Organizations.

* Religious Institutions.

* Documentation: Registration certificates, board decisions, and other relevant documents are usually required when needing to open an NGO bank account.

Special Accounts to Meet Particular Needs:

Nigerian banks further provide a set of special accounts to cater to unique banking requirements.

1. Diaspora Accounts:

* Purpose: To facilitate the management of finances on these accounts for Nigerians who reside outside the country.

Features:

* Accounts can be opened online: To facilitate online transactions.

* Send/receive money from other countries: This includes cross-border transactions.

* Investment in Nigeria: Fund investment in various things in Nigeria.

* Pay Nigerian bills: It is possible to take care of your bills back home where you are.

Whom for:  

* Nigerians not staying in Nigeria.

* For those who want to invest in Nigeria.

* Those who want to preserve their cash in Nigeria when they are living elsewhere.

* Money sent home: The sending of money home to Nigeria becomes facilitated, resulting in inflow of a lot of foreign cash into the country.

2. Student Accounts:

* Purpose: These accounts provide students the basic banking facility with minimal costs.

Features:

* Almost no or very little charges for keeping the account: This eases the way for students who can’t afford too much of a charge.

* Debit card usage: With your debit card, you can access ATMs and purchase items from stores.

* Online or mobile banking: You can bank wherever.

* Special offers or lower prices