SAVINGS ACCOUNT IN NIGERIA: WHAT YOU SHOULD KNOW
No matter the situation in countries around the world. No matter where you belong on the financial ladder. No matter what happens among banks in any economy in trying to outdo one another, there is an irrevocable need to put your money where it earns you more. Finding a suitable financial savings institution has never been more necessary than this. The economic situation in Nigeria is on a rollercoaster overdrive and it is beyond reasonable to find a way to stash away some cash somewhere safe in the event of future needs. As more and more families live below $1 in Nigeria, it cannot be overemphasized that individuals and families just have to save or risk financial wilderness sooner rather than later. It is paramount to note that even in developed economies and countries, the saving culture among citizens are encouraged to save and saving is more or less a religion. There is no compromise in cultivating a saving culture; if not just for you but for the sake of your loved ones. Going under financial waters is not an enviable situation to find yourself.
The rivalry for customers’ deposits and banking needs have prompted Nigerian banks to be creative with the types of accounts and services they offer. Banks in Nigeria therefore differentiated between services and accounts, sometimes, by changing the features of such services or accounts. It is forgiveable to be confused at the influx of many bank account choices staring you in the face but deciding on the best bank account suitable or peculiar to your financial situation is as important as breathing in fresh air. In deciding on the best savings bank account, you must answer some relevant questions:
- How much is my money in the savings account gaining?
- How much does my bank charge me for services rendered each accounting period?
- Can I get better rates elsewhere?
- Can I get better or cheaper service charge?
When the above questions are put to rest, then you have a clearer picture on the best and suitable savings bank account to open. Knowing more about the nature of savings account in Nigeria is therefore not out of place.
Features of a Savings Account
There are thousands of savings accounts in the economy; selecting the best one to grow your hard-earned money can be a grueling experience. To make it easier and barely painstaking, below is a top 10 savings account features you should know:
Top 10 Savings Account Features
- Interest Rates
A competitive interest rate will help your savings grow faster. The higher the rate, the quicker you willl earn.
- Bonus Incentives
A bonus rate is offered on top of the base rate when specific criteria are met. It often requires you to make a minimum deposit per month, make transactions through a linked bank account, or limit withdrawals.
- Introductory Interest Rate
Be sure to check the standard rate, as you don’t want to see your interest earnings plummet with an uncompetitive rate after the first few idyllic months.
- Minimum Opening Deposit
Some financial institutions require you to make a minimum deposit before they open and activate your savings account. This is usually to cover costs associated with setting up the new account and then maintaining it.
- Monthly Deposit Requirements
In order to lap up a high interest rate, you are often required to maintain a minimum monthly balance or deposit a certain amount every month. If you fail to meet the requirements the bank will lower your interest rate or pay no interest for that month.
- Frequency of Withdrawals
A lot of accounts have a limit on the number of withdrawals you can make a month. In order to secure a bonus rate you may not even be able to make a withdrawal in a month.
- ATM Facility
Many online savings accounts do not come with a hole in the wall facility where you can withdraw money from your savings account.
- Linked Accounts:
With most online savings accounts you’ll need to have a linked transaction account so you can transfer money to and from your savings bundle. Sometimes this account needs to be with the same bank and sometimes you can link to any bank account.
- Automatic Salary Deposits:
If you are a little forgetful and unreliable when it comes to savings, then look for an account that offers direct crediting. This means a portion of your salary can be automatically deposited into your savings account from your employer each month.
- Account Keeping Fees
We deliver you positive news, there are plenty of savings accounts out there with no account fees. But some banks may slip a few fees your way. Be wary of the following:
- ATM withdrawal fee
- Monthly account fee
- Branch deposit fee
- Over the counter transaction fee
Access and Availability as One of the Benefits of Having a Savings Account in Nigeria.
The benefits of having a savings account in Nigeria – especially for low income earners – keeps giving and it is little wonder most people have a savings account. Having a savings account comes with a lot of benefits. Some of the benefits of having a savings account are as follows:
Access and availability:
Savings accounts are easy to open and you can withdraw and deposit money anytime (within federal limits) at ATMs or via 24-hour, online access, unlike long-term investment accounts. Many institutions will allow you to link your savings account to other accounts, like a checking account, which can help you to avoid costly overdraw fees.
A savings account at a bank that is a member of NDIC, (Nigeria Deposit Insurance Corporation), according to the NDIC Act 2006 guarantees payment of deposits up to the maximum insured sum (N500,000.00 to a depositor in universal banks and N200,000 to a depositor in MFBs and PMIs) in the event of the failure of a participating financial institution.
It’s a liquid asset:
Savings accounts deal in cash, which means you don’t have to worry about selling investments or making other complicated moves to access your money.
Savings accounts accrue interest:
The Central Bank of Nigeria o · The Central Bank of Nigeria (CBN) has instructed deposit money banks in Nigeria not to pay less than 1.25% in interest on savings deposit accounts.
Low startup requirement:
Many savings accounts in Nigeria can be opened with a start up balance of just #0. Opening a UBA savings account for instance requires zero deposit. Another bank is Zenith Bank; you can open a savings account anywhere with #0.
Automated bill payments:
Many financial institutions allow bills to be paid automatically out of a savings account without being subjected to the withdrawal and transfer laws, helping you avoid late fees or missed payments.
No lock-in period:
You are not locked in for any period of time, which means you can switch savings accounts as often as you like.
Minimum Balance as One of the Implications of Owning a Savings Account in Nigeria
The implications of owning a savings account is a reality that can be ugly beautiful depending on where you stand on the financial table in Nigeria. While these implications might not be a problem for some people, it might just turn out a pain in the neck for many other people on the wrong side of the financial table. Below are some of the implications of owning a savings account:
Minimum Balance Requirements:
Most savings accounts have minimum balance requirements or monthly maintenance fees. If your savings account falls below the minimum balance requirement, the bank will deduct fees from your account, negating from interests you earned.
Low Interest Rates:
Interest rates are lower compared to other types of accounts or investments, such as money market accounts or certificate of deposits (CD).
Federal Withdrawal Limits:
The banks will charge you a fee if you exceed the federal limits, or they can change your account from savings to checking accounts if you continue on withdrawing more than six times per month.
Access and availability:
This should be one of the benefits of owning a savings/checking account. But if you find easy access to these funds is too much of a temptation, then that could make long-term saving difficult.
Rates can change:
Savings account interest rates are variable, meaning that financial institutions are free to set and change interest rates as they wish. High-interest savings account rates will stay largely in line with the movements of the federal rate.
If your savings account does not pay a competitive interest rate, inflation could be eating up the value of your earned interest, leaving you with an account balance that is worth less a year from now than it is in today’s dollars.
Most traditional banks or credit unions compound your savings account interest monthly, or even annually. This means the full potential of your money is not always realized, especially when compared to other investment opportunities.
Minimum and Maximum Amount in Savings Account
The maximum amount a savings account can hold in Nigeria varies from bank to bank. Below are a list of some banks in Nigeria and the maximum amount they allow in a customer’s savings account:
- Stambic IBTC Bank. #2,000,000
- Access Bank. #2,000,000
- First City Monument Bank (FCMB). #2,000,000
- First Bank of Nigeria. #2,000,000
- Guarantee Trust Bank. #5,000,000
- Zenith Bank. #5,000,000
- United Bank for Africa (UBA). #5,000,000
- Fidelity Bank. #4,000,000
- Union Bank. #4,000,000
Moreover, many banks allow customer’s open savings accounts on #0. Hence, the minimum amount of savings account in Nigeria is flexible.
How to Open a Savings Account
Opening a savings account in Nigeria has never been easier. In fact, it is possible to open a savings account without appearing in any banking hall. To open a savings account, all you have to do is visit the website or the bank branch of your choice; pick the kind of account you want (savings); provide every necessary information; consent to the terms; print, sign and/or mail and fund your account. A bank official will work on your application and before long, an account number would be assigned to you.
FCMB as One of the Best Banks to Open a Savings Account in Nigeria
Banks in Nigeria have their various strengths and weaknesses. While DiamondAccess offers interesting interest rates, FCMB, GTB and First Bank offer superior online banking services including very favourable interest rates. UBA on the other hand ensures customers are informed at every givven time of new or novel trends in the banking industry. Hence, the top 5 according to legit.com in 2018 is Diamond HDIA savings account (Access Bank), Diamond Xtra savings account (Access Bank), FCMB savings account, GTB savings account and First Bank savings account.
Difference Between Savings and Current Accounts
With a savings account, you earn by saving but with a current account, the purpose of the account holder is to conduct frequent business/financial transactions.
* Who it is meant for:
A savings account can only be opened by individuals for their use. Current account is opened by businesses or firms who want to conduct various bank transactions according to the need of their business.
Savings account is similar in this regard as in the case with current account; but the requirement for minimum balance is generally lower in savings account.
Under savings account, interest on savings is earned by the account holder, but in current account, banks generally do not provide interest on deposits because the deposited money has to be used in business transactions.
So, now that you know the difference between both account types, next time, just walk into the bank open your preferred account in a jiffy!
A savings account is a saver’s dream; especially low income earners. It is a bank account at a retail bank whose characteristics includes the requirements that only a limited number of withdrawals can take place, it does not allow for cheque facilities. it has limited transfer facilities and does not allow you to overdraw. People choose savings account for variety of reasons which includes stashing extra cash at a safe and convenient place.
There are a number of types of savings accounts for peculiar purposes, including young savers, for retirees, Christmas club accounts, investment accounts, money market accounts, etc. Whichever type of savings account, there is no gainsaying that savings account will always be popular with most people anywhere in the world.