What is the difference between savings account and current account in Nigeria?
Most people are often confused on the type of account to open when they visit a bank in Nigeria. You often meet the bank’s customer care agent to clarify this issue. Well, this post will explain the difference between a savings account and a current account, and clear the confusion between these popular account type used in Nigeria.
Difference Between Savings Account and Current Account in Nigeria
1. Savings Account:
A savings bank account is the most widely recognized sort of deposit account in Nigeria that requires little or no capital to open. From the name, the purpose of creating such an account in any commercial bank in Nigeria is to save. Although, there are some transactions in these type of account that is limited when compared to current account.
The advantage of using a savings account is that it gives a variety of bank services such as ATM Debit Card facility with distinctive variations, allocation of some percentage of interest to such bank account, internet banking, online cash exchange, mobile banking and so on. All these services are guided by the bank’s terms and conditions which includes a number of cash withdrawals using the ATM.
You might want to know the disadvantage of opening a savings account in Nigeria, even though it has so many advantages. One pitfall is that you don’t have the benefits of having a cheque book and third-party transactions are not available for savings account (financial institutions like Diamond Bank offers an exception to this), limited withdrawals via ATM, unable to withdraw all the money in the account, e.t.c.
2. Current Account
A current or business account, is a type of account in Nigeria that is suitable for businesses as you have the freedom of unlimited number of withdrawals for running your daily transactions. This kind of account can be opened by an individual doing large scale businesses, company, firms, organizations and so on. Unlike the savings account, which requires little or no cash to create, current account requires a certain amount of deposit to create after which money can be withdrawn anytime till zero. It can also be called “Demand deposit account” or “transactional account.”
When you open a current bank account, you have access to direct debits, internet banking, overdraft facility, transfers and so on. An advantage of current account over savings is that any amount can be withdrawn or deposited whenever you want without giving any notification, you can withdraw all your monies, cheque books and third-party withdrawals (payee) are also available.
Below is a better analysis to help understand the contrast that exist between a savings account and a current account.
- Saving account is best for individuals or better still salaried individuals while current account is best for companies or business man where more than one transaction is required.
- In savings account, there is a percentage of interest based on deposited amount while in current account, no interest is there on deposited amount.
- To open a savings account, smaller amount is required, while in opening a current account, higher amount is required.
- In saving account, no facility of overdraft is available for individuals while facility of overdraft is available for current account holders.
- In a savings account, limited withdrawals are available while unlimited withdrawals are available for current account holders.
- In saving account, pass book is issued to individuals while pass books are not issued to businessmen or companies using current account.
Those are the differences between savings account and current account. You might also want to find out among the banks that offer the best savings and current account in Nigeria for you to make your choice.