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Your choice of bank account can put more money in your pocket
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As the cost of doing business in the country gets higher the cost of doing banking business is equally increasing. As a result, many bank customers pay too many charges to maintain a bank account that sometimes don’t even need. You can reduce your banking costs and save more money if you are a little careful about the type of account you choose.
The type of account you choose should be the most cost-effective for you, depending on what you use the account for.
You should not, for example, choose an account with high monthly fees if you want to use the account mainly to save money and make two other transactions every other month. Banks charge N2.5 per mille, that is, N2.5 on every N1,000 balance at the end of the month on current accounts whether you used it or not.
Some customers maintain a current account simply to enable them issue third party cheques or enjoy an overdraft facility once in a while but end up paying so much that the costs outweigh the benefits.
Finding the lowest fee bank account depends on your banking habits: Do you make lots of small transactions in a month, or a few larger ones? Do you like to do your banking via internet and telephone banking, or are you more comfortable with automated teller machines (ATMs) and EFTPOS? Do you prefer to visit a branch to deal with a person face to face? Do you need a cheque book linked to your account? Once you’ve decided what features you use most regularly, check the fees associated with those activities.
If you don’t mind performing most transactions electronically, there are some good products available, with low or even no monthly account keeping fees. However, it’s best to check the finer details to make sure there are no extra fees tucked on to low-fee products. Over-the-counter service fees, other-institution ATM fees and charges for transactions over a set monthly amount may apply.
Choosing an account
There are a number of factors involved in choosing the account that best suits you. The first step is to establish the purpose for opening a bank account - Are you looking for an account where you can deposit your salary and transact on a day-to-day basis or are you looking for an account where you can save money and occasionally transact?
Transaction costs
When you select a bank account, you need to determine the transactional costs associated with the account.
Your choice of account should also be determined by whether you are a low-, medium- or high-volume transactor. A low-volume transactor is someone who makes less than eight transactions a month. Transactions include cash withdrawals, cash deposits and debit order payments.
You should also consider the different fee packages that are now available on most accounts, as these could reduce your bank charges depending on the transactions you do each month.
However, if your banking habits is not what can be fixed to one type of account but requires a little of every kind of transaction, for example, issue a cheque today, get an overdraft facility tomorrow, have someone pay in cheque, make cash withdrawals, pay some fees or utilities and then generally save money either on short, medium or long term, you still don’t need to operate three different accounts to do all these. A one-one-for-all account would come in handy here.
Around the world, banks have such accounts that bundles features of all the different types of account into one for flexibility and already some Nigerian banks are beginning to adopt all-in one account pattern.
Bankers describe a one-account as a ‘new-age’ way of banking, that allows you to simplify your banking by combining your savings, term deposit, cheques, overdraft, investments and current account into a single facility. This helps you to make the most of your money by enabling you to manage your cash flow more efficiently.
Benefits of one-accounts include
Improve the returns on your savings: Generally, interest rates on savings are lower than those charged on loans. By merging your savings into your One Account you further reduce your outstanding balance and interest charges and so earn better returns on your money - tax free.
Reduce your interest charges: Interest is calculated daily on your outstanding balance. Save on interest charges by consolidating your balances and depositing your monthly income into your One Account. This will reduce your outstanding balance and your interest costs.
Lower your overall interest rate: By combining all your finance facilities into a single account you qualify for preferential tiered interest rates based on the structure of your facility.
Reduce your transaction costs: By reducing the number of accounts you hold you also cut down on the number of times you need to transfer money between accounts. You pay a single monthly fee for your One Account, which covers all of your day-to-day transactions.
FCMB ‘All-in-One’ Account
In Nigeria, First City Monument Bank’s (FCMB) All-in-One’ Account is typical example. The Account, combines the benefits of a savings account with the flexibility and convenience of a current account and high interest rate of fixed deposit account.
The ‘All-in-One’ Account is designed for customers with surplus funds who desire to earn competitive interest payments and require flexibility for withdrawal which a fixed deposit does not give.
It also offers high interest rate of 6.0 per cent per annum, personalised check book for over the counter transactions in the bank’s branches, four free bank drafts that allows for third party withdrawal and lodgment of clearing instrument and dividend warrants.
Other benefits include: access to optional overdraft line via linked current account, free Debit/ATM Gold card, free SMS and e-mail transaction and free internet banking service.
Spring One Account
Spring One Account from Spring Bank bundles various banking needs of an average employee and has various features which include a cheque clearing account, classification of account into various categories like Premium, Gold, Silver and Standard, holder of account has automatic access to a 12-month revolving salary advance and over draft, zero Cot for non-borrowing accounts, easy access to consumers loans, standing orders for bills payment and an applicant must be a confirmed staff in a public or private sector institution.
The account holder will enjoy an interest rate of two per cent yearly; zero Cot provided minimum balance is maintained; automatic access to salary advance; online account operation option ; free debit card; transaction alert services; access to financial advisory services among others.
The type of account you choose should be the most cost-effective for you, depending on what you use the account for.
You should not, for example, choose an account with high monthly fees if you want to use the account mainly to save money and make two other transactions every other month. Banks charge N2.5 per mille, that is, N2.5 on every N1,000 balance at the end of the month on current accounts whether you used it or not.
Some customers maintain a current account simply to enable them issue third party cheques or enjoy an overdraft facility once in a while but end up paying so much that the costs outweigh the benefits.
Finding the lowest fee bank account depends on your banking habits: Do you make lots of small transactions in a month, or a few larger ones? Do you like to do your banking via internet and telephone banking, or are you more comfortable with automated teller machines (ATMs) and EFTPOS? Do you prefer to visit a branch to deal with a person face to face? Do you need a cheque book linked to your account? Once you’ve decided what features you use most regularly, check the fees associated with those activities.
If you don’t mind performing most transactions electronically, there are some good products available, with low or even no monthly account keeping fees. However, it’s best to check the finer details to make sure there are no extra fees tucked on to low-fee products. Over-the-counter service fees, other-institution ATM fees and charges for transactions over a set monthly amount may apply.
Choosing an account
There are a number of factors involved in choosing the account that best suits you. The first step is to establish the purpose for opening a bank account - Are you looking for an account where you can deposit your salary and transact on a day-to-day basis or are you looking for an account where you can save money and occasionally transact?
Transaction costs
When you select a bank account, you need to determine the transactional costs associated with the account.
Your choice of account should also be determined by whether you are a low-, medium- or high-volume transactor. A low-volume transactor is someone who makes less than eight transactions a month. Transactions include cash withdrawals, cash deposits and debit order payments.
You should also consider the different fee packages that are now available on most accounts, as these could reduce your bank charges depending on the transactions you do each month.
However, if your banking habits is not what can be fixed to one type of account but requires a little of every kind of transaction, for example, issue a cheque today, get an overdraft facility tomorrow, have someone pay in cheque, make cash withdrawals, pay some fees or utilities and then generally save money either on short, medium or long term, you still don’t need to operate three different accounts to do all these. A one-one-for-all account would come in handy here.
Around the world, banks have such accounts that bundles features of all the different types of account into one for flexibility and already some Nigerian banks are beginning to adopt all-in one account pattern.
Bankers describe a one-account as a ‘new-age’ way of banking, that allows you to simplify your banking by combining your savings, term deposit, cheques, overdraft, investments and current account into a single facility. This helps you to make the most of your money by enabling you to manage your cash flow more efficiently.
Benefits of one-accounts include
Improve the returns on your savings: Generally, interest rates on savings are lower than those charged on loans. By merging your savings into your One Account you further reduce your outstanding balance and interest charges and so earn better returns on your money - tax free.
Reduce your interest charges: Interest is calculated daily on your outstanding balance. Save on interest charges by consolidating your balances and depositing your monthly income into your One Account. This will reduce your outstanding balance and your interest costs.
Lower your overall interest rate: By combining all your finance facilities into a single account you qualify for preferential tiered interest rates based on the structure of your facility.
Reduce your transaction costs: By reducing the number of accounts you hold you also cut down on the number of times you need to transfer money between accounts. You pay a single monthly fee for your One Account, which covers all of your day-to-day transactions.
FCMB ‘All-in-One’ Account
In Nigeria, First City Monument Bank’s (FCMB) All-in-One’ Account is typical example. The Account, combines the benefits of a savings account with the flexibility and convenience of a current account and high interest rate of fixed deposit account.
The ‘All-in-One’ Account is designed for customers with surplus funds who desire to earn competitive interest payments and require flexibility for withdrawal which a fixed deposit does not give.
It also offers high interest rate of 6.0 per cent per annum, personalised check book for over the counter transactions in the bank’s branches, four free bank drafts that allows for third party withdrawal and lodgment of clearing instrument and dividend warrants.
Other benefits include: access to optional overdraft line via linked current account, free Debit/ATM Gold card, free SMS and e-mail transaction and free internet banking service.
Spring One Account
Spring One Account from Spring Bank bundles various banking needs of an average employee and has various features which include a cheque clearing account, classification of account into various categories like Premium, Gold, Silver and Standard, holder of account has automatic access to a 12-month revolving salary advance and over draft, zero Cot for non-borrowing accounts, easy access to consumers loans, standing orders for bills payment and an applicant must be a confirmed staff in a public or private sector institution.
The account holder will enjoy an interest rate of two per cent yearly; zero Cot provided minimum balance is maintained; automatic access to salary advance; online account operation option ; free debit card; transaction alert services; access to financial advisory services among others.
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