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types of bank accounts and their operation

TYPES OF BANK ACCOUNTS. There are three types of account which customers can open in a bank. These are current, deposit and savings accounts.

what is a current account types of account

Current Account: Current account is the type of bank account usually operated by businessmen and organizations and is required if a customer wishes to make payments through cheques.

In a current account, the customer is free to withdraw money on demand. The customer will be given a cheque book which he uses to withdraw money any time.

Holders of current accounts are not entitled to interest but are charged commission by the bank. They can obtain loans and overdrafts from the bank. Simply put, current account is an account on which cheques are drawn.

Features of current account type of account

  1. Money can be withdrawn frequently
  2. Customers are entitled to the use of cheque book
  3. Payment of commission is made by the customers to the bank
  4. Holders of current account are not entitled to interest
  5. Other people can withdraw money from the account on behalf of the customers.

Procedure for opening a current account

Procedure for opening a current account

  1. The customer will collect and fill application form.
  2. He will submit a prescribed number of passport photographs.
  3. Two guarantors or referees must be provided to recommend the applicant
  4. The customer will submit his complete particulars to the bank, showing personal details, especially when the account is an individual account but when it is a corporate account, other documents like certificate of incorporation, memorandum and articles of association, etc. must be added.

The bank will issue him with a pay-in slip booklet.

He will be issued an account number.

He will pay in an initial deposit.

A cheque book will be given to him.

Savings account types

in recent days there are three types of savings accounts

  1. tier one
  2. tier two and
  3. tier three types of accounts

each of the savings accounts listed above have different requirement for opening in Nigeria. they also have different running maximum balance

Savings account is the most common form of bank account. It encourages the low income earners to form or develop the habit of saving.

This type of account is operated with the use of passbook. Owners or holders of savings account are paid interest for keeping their money in the bank and if withdrawals are more than twice in a month, it may not attract interest. to be be open here, there is a certain amount that you can withdraw daily.

as long as you have not exceeded this limit you can cash out as many times as possible

The bank will issue him with a pay-in slip booklet.

He will be issued an account number.

He will pay in an initial deposit.

A cheque book will be given to him.

Savings account: Savings account is the most common form of bank account. It encourages the low income earners to form or develop the habit of saving. This type of account is operated with the use of passbook.

Owners or holders of savings account are paid interest for keeping their money in the bank and if withdrawals are more than twice in a month, it may not attract interest.

Features of savings accounts

  •  Money can only be withdrawn occasionally if interest is to be paid.
  • It attracts a favourable rate of interest.
  •  Holders are issued with a passbook.
  • Withdrawals cannot be made by another person on behalf of the customer.

Differences between savings account and current account

 Savings AccountCurrent Account
1Customers are issued with passbooksCustomers are issued with cheque books
2It attracts interestNo interests is given to customers
3Only the holder can withdraw from the accountOther people issued with a cheque can withdraw from the account
4Withdrawal is occasional if interest is to be givenWithdrawal can be frequent

     Fixed deposit account:

Fixed deposit account, also called time account deposit, is the type of account that is usually operated by individuals and organizations who have excess liquidity.

They put part of the excess liquidity or money in the fixed or time account in order to earn interest. Holders are entitled to higher interest than savings account.

Customers operating a fixed deposit type of account can withdraw subject to seven days of notice to the bank.

People save money in deposit account for a specific purpose and it can be renewed on maturity. The customer will be issued with deposit account passbook.

Fixed deposit is withdrawn at an agreed time.

fixed deposit type of account

Features of deposit account

  •  Money is deposited for a specific period of time.
  •  It attracts higher interest rate.
  •  Notice of seven days must be given before withdrawal.

TYPES OF BANK ACCOUNTS. There are three types of account which customers can open in a bank. These are current, deposit and savings accounts.

  • Current Account: Current account is the type of bank account usually operated by businessmen and organizations and is required if a customer wishes to make payments through cheques. In a current account, the customer is free to withdraw money on demand. The customer will be given a cheque book which he uses to withdraw money any time. Holders of current accounts are not entitled to interest but are charged commission by the bank. They can obtain loans and overdrafts from the bank. Simply put, current account is an account on which cheques are drawn.

Features of current account

  1. Money can be withdrawn frequently
  2. Customers are entitled to the use of cheque book
  3. Payment of commission is made by the customers to the bank
  4. Holders of current account are not entitled to interest
  5. Other people can withdraw money from the account on behalf of the customers.

Procedure for opening a current account

Procedure for opening a current account

  1. The customer will collect and fill application form.
  2. He will submit a prescribed number of passport photographs.
  3. Two guarantors or referees must be provided to recommend the applicant
  4. The customer will submit his complete particulars to the bank, showing personal details, especially when the account is an individual account but when it is a corporate account, other documents like certificate of incorporation, memorandum and articles of association, etc. must be added.
  5. The bank will issue him with a pay-in slip booklet.
  6. He will be issued an account number.
  7. He will pay in an initial deposit.
  8. A cheque book will be given to him.
  9. Savings account: Savings account is the most common form of bank account. It encourages the low income earners to form or develop the habit of saving. This type of account is operated with the use of passbook. Owners or holders of savings account are paid interest for keeping their money in the bank and if withdrawals are more than twice in a month, it may not attract interest.

Features of savings accounts

  •  Money can only be withdrawn occasionally if interest is to be paid.
  • It attracts a favourable rate of interest.
  •  Holders are issued with a passbook.
  • Withdrawals cannot be made by another person on behalf of the customer.

Differences between savings account and current account

 Savings AccountCurrent Account
1Customers are issued with passbooksCustomers are issued with cheque books
2It attracts interestNo interests is given to customers
3Only the holder can withdraw from the accountOther people issued with a cheque can withdraw from the account
4Withdrawal is occasional if interest is to be givenWithdrawal can be frequent

3.       Fixed deposit account: Fixed deposit account, also called time account deposit, is the type of account that is usually operated by individuals and organisations who have excess liquidity. They put part of the excess liquidity or money in the fixed or time account in order to earn interest. Holders are entitled to higher interest than savings account. Customers can withdraw subject to seven days of notice People save money in deposit account for a specific purpose and it can be renewed on maturity. The customer will be issued with deposit account passbook. Fixed deposit is withdrawn at an agreed time.

Features of deposit account

  •  Money is deposited for a specific period of time.
  •  It attracts higher interest rate.
  •  Notice of seven days must be given before withdrawal.
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