Types of Bank Accounts in Nigeria Compared

Types of Bank Accounts in Nigeria Compared

Bank Accounts in Nigeria

If you’re in Nigeria and looking to open a bank account, you’ve got several options to consider. Each type of account comes with its features and benefits, so it’s important to understand them before making a decision. In this guide, I’ll walk you through the various types of bank accounts in Nigeria, compare their features, and help you choose the right one for your lifestyle.

Types of Bank Accounts in Nigeria

Savings Accounts

Savings accounts are perfect for saving money for emergencies or short-term goals like holidays or gadgets. They’re designed to help you save money, even though people sometimes use them for regular withdrawals. They typically offer a low interest rate, around 4%. However, many Nigerians don’t see this interest accumulate because they frequently use their savings accounts for day-to-day transactions, which prevents interest from accruing on overused accounts.

Savings accounts usually have a cap on the amount you can deposit, often between 2 million and 5 million Naira. This limit can be increased by asking your bank. Also, there’s usually a limit on how much you can withdraw at once, often ranging from 500,000 to 1 million Naira. And you’ve probably noticed that savings accounts come with various charges, like card maintenance fees and transfer fees. 

Major Features

  • Low or no minimum balance requirements
  • Interest earned on deposits
  • Limited withdrawals per month

Benefits

  • Encourages saving habits
  • Earns interest on your savings
  • Provides a secure place to keep your money

Cons

  • Low-interest rates
  • Limits on deposits and withdrawals
  • Various fees apply

Top Banks for Savings Accounts in Nigeria

BankAccount NameInterest Rate (%)
EcobankPremier Savings9
Zenith BankEazySave Classic8
Stanbic IBTCMax Yield8
GTBGT Target8
Unity BankTarget Savings8

Current Accounts

A current account is created for frequent transactions, like depositing money, making payments, and transferring funds. Whether you’re an individual or a business, it gives you the flexibility to manage your finances easily.

However, they’re handy for business owners who need to manage daily transactions efficiently. Unlike savings accounts, current accounts don’t usually earn interest because the money is often used for business purposes.

Opening a current account can be a bit more complicated than opening other accounts. While they typically don’t have limits on the amount you can send or receive, the amounts involved are usually higher. 

Besides online banking and debit cards, you can also use a chequebook. Overdraft services are often allowed, which means you can spend more money than you have available in your bank account, resulting in a negative balance. Essentially, it allows you to borrow funds from your bank temporarily. Banks may charge fees or interest for using an overdraft, but it can provide flexibility in managing your finances during times when your account balance is low.

Major Features

  • No limit on withdrawals
  • Usually requires a higher minimum balance
  • Often offers overdraft facilities

Benefits

  • Convenient for frequent transactions
  • Ideal for businesses and professionals
  • Access to overdraft facilities for emergencies

Cons

  • They might charge higher fees.
  • If you spend more than you have, you’ll face overdraft fees.
  • They usually offer lower interest rates compared to other account types.

Top Banks for Current Accounts in Nigeria

  • Standard Chartered Bank Nigeria
  • First Bank of Nigeria
  • Bank of Industry (BOI)
  • Heritage Bank Nigeria
  • Stanbic IBCT Bank

Fixed Deposit Accounts

These accounts are mainly for investment purposes. You deposit a specific amount for a set period, during which you earn a high interest rate.

Fixed deposit accounts normally offer higher interest rates compared to savings accounts. However, your funds are locked in for a fixed period, and there are penalties for early withdrawals.

Major Features

  • Higher interest rates compared to savings accounts
  • Funds locked in for a fixed period
  • Penalties for early withdrawals

Benefits

  • Higher returns on savings
  • Encourages long-term saving goals
  • Provides a disciplined approach to saving

Cons

  • Your money is locked in for that time.
  •  If you take it out early, you face penalties.
  •  Changes in interest rates can affect your returns.

Top Banks for Fixed Deposit Accounts in Nigeria

BankMinimum DepositAnnual Interest Rate
DLM Asset Management LimitedN10,00015%
Heritage Bank NigeriaN100,00013.88%
Stanbic IBCT BankN10,00011%
United Bank for AfricaN100,0008%
First City Monument BankN10,0007-8%

Foreign Currency Accounts (Domiciliary accounts)

Foreign currency accounts, also known as domiciliary accounts or “Dom” accounts, are designed for those who frequently deal with foreign currencies or travel abroad. They provide a convenient way to manage funds without worrying about exchange rate risks.

In Nigeria, these accounts are primarily used to hold foreign currencies like USD, GBP, EUR, etc. They function similarly to savings accounts but hold foreign currency instead of the local currency.

Major Features

  • Denominated in foreign currencies like USD, GBP, EUR, etc.
  • Protects against currency fluctuations
  • Enables international transactions

Benefits

  • Convenient for frequent travellers or expatriates
  • Hedge against currency devaluation
  • Facilitates international business transactions

Cons

  • They might charge higher fees for foreign currency transactions.
  • Exchange rate changes can impact your money’s value.
  • Some banks have strict rules for opening and managing these accounts.

Top Banks for Savings Accounts in Nigeria

BankForeign Currencies Allowed
Zenith BankUSD, GBP, EUR, JPY
Access BankUSD, GBP, EUR, JPY
Stanbic IBTC BankUSD, GBP, EUR, AUD
First BankUSD, GBP, EUR, CFA
United Bank for Africa (UBA)USD, GBP, EUR

Comparison of Bank Account Types

Account TypeSavings AccountCurrent AccountFixed Deposit AccountForeign Currency Account (Domiciliary Account)
PurposeSaving for emergencies or short-term goalsDaily transaction managementLong-term savingsDealing with foreign currencies or international transactions
Interest RateLow interest rate (around 4%)Usually doesn’t earn interestHigher interest ratesN/A (Dependent on currency fluctuations)
Access to FundsLimited withdrawals per monthUnlimited withdrawalsLocked in for a fixed periodEnables international transactions
Minimum BalanceLow or no minimum balance requirementsUsually requires a higher minimum balanceDepends on bank and the duration of the depositN/A (Dependent on currency)
Overdraft FacilitiesNot typically offeredOften offeredNot offeredN/A
CurrencyNigerian NairaNigerian NairaNigerian NairaVarious foreign currencies (USD, GBP, EUR, etc.)

Conclusion

Whether you value saving, frequent transactions, or international dealings, there’s a bank account tailored for you. Take the opportunity to explore your choices and optimize your banking journey in Nigeria.

FAQs

Can I open multiple bank accounts in Nigeria?

Yes, you can open multiple bank accounts in Nigeria across different banks or even within the same bank.

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