9 Different Types of Bank Accounts

Different Types of Bank Accounts

Banking as a human activity is a very important one, for both the poor and the rich. It is one of the most important financial asset one must claim ownership of and it is quite relatively easy to get. But you can’t just walk into any banking hall for that purpose without first knowing about the different types of bank accounts and which one is suitable for you.

The first account i ever i had was a Savings Account from Guaranty trust Bank. I was still in school, it should be in my year one. And my friend who already had an account with them stood in for me as a referee and that was that. Now i have a domiciliary account with them as well.

Today, we shall be talking about the different types of bank accounts. Some of which most of us would never have any dealings with.

And the first on our list is.

  • Savings Account

A savings account, which i like to call the poor man’s account is an interest-bearing deposit account held at a bank or other financial institution that provides a modest interest rate.  In most cases, banks do not provide checks with savings accounts. This type of account would help facilitate saving and enable easy access your funds.

The point to take from the above paragraph is that, a savings account is a deposit account that pays interest for the money kept in it.

It is the most popular banking account in Nigeria!

  • Current Account

The class of Nigerians who are really involved with this type of banking account are workers and business people. It is the type of banking account from which money may be withdrawn without notice. It is also the kind of banking account suitable for making payments to creditors by using cheques. The general rule is, current account holders do not get any interest on their balance lying in current account with the bank.

It is not the best account to operate if the goal is to save money, as there is no value added to the money saved in form of interests.

  • Joint Account

This is another banking account held by more than one person, each individual having the right to deposit and withdraw funds.

Two types of joint accounts are:

(1) Joint-tenancy account (owned usually by a married couple) in which either owner may individually exercise full rights to make deposits or withdrawals on his or her signatures.
(2) Tenants-in-common account (usually owned by two or more business partners or directors) in which signatures of all owners are required to exercise certain rights such as making withdrawals. (1)

  • Domiciliary Account

This is my favorite account by far. The only account in conjunction with a dollar master card that has allowed me the rare privilege of buying and paying for services online without too much issues (i still get the usual checks that every Nigerian paying from Nigeria goes through but the card is widely accepted).

Simply put, a domiciliary account is a type of current account that allows the account holder to fund it with foreign currencies such as dollars, pounds or euros and enables the holder to carry out foreign transactions on that account.

  • Corporate Account

A corporate account is the type of banking account that specializes in offering services for companies and offshore businesses. The difference between personal and investment banking accounts lies on the fact that it provides services targeted directly to businesses. Corporate accounts are mainly opened to meet business purposes.

Little wonder that the account type is mostly popular amongst traders (business people) here in Nigeria.

  • Non-resident Nigerian account

The Non Resident Nigerian (NRN) Services provides Nigerians living abroad with access to a wide range of products and services; some of which include Savings and Current accounts, Investment in Money Market instruments and eBanking services.

This premium service offers Nigerians in Diaspora the opportunity to open and and operate a Nigerian bank account from anywhere in the world.

  • Fixed Account

It is an investment account with a specific amount invested at an agreed interest rate and tenor. Based on customer’s instructions, at the end of agreed period (tenor), the investment can either be rolled over (re-invested) or liquidated (returned to customer) with the interest amount earned.

  • Money Market Account

This is yet another kind of account but a bit different from the others. It is a non-financial account that will pay you interest based on current interest rates in the money markets. Most money market accounts pay a higher interest rate than regular passbook savings accounts.

  • IRA Accounts

You can call it the pension account. IRA is an abbreviation for Individual Retirement Accounts. It is the account you stash your cash for retirement. It encourages extra savings since there is no taxes on your income growth.

Okay

These are the different types of bank accounts that we shall be dealing out at the moment. With time we promise to update this post. So stay tuned.