In simple words, a current account is day-to-day banking transactions made easy. Virtually anything can be done when you have a current account. But the larger perception, particularly among Nigerians is that a current account is only for the rich. Nothing can be further from the truth.
A current account enables you to carry out all daily-banking transactions. The major benefit of a current account is convenience, says Christopher Oziegbe, a banker, “you can do third party cash withdrawal, unlike the conventional savings account. Current account can also be used to access loan where savings account cannot.”
Flexibility is key to maximising banking experience. In the age of online technology, the customer should not be limited by distance. Being able to make any type of transaction from any location you are is part of the reason you should get a current account and almost anyone can get one as long as you have the right documents.
With a savings account you can only do as much as the bank allows, like deposit, withdrawal, and limited transfers. You may never get a chequebook, which saves you the number of trips to the bank with a savings account but it is a guaranteed feature of having a current account.
“Current account cheques can also be paid into another bank. That means you can issue a cheque to a beneficiary who does not use same ban with you and you can also receive other banks’ cheques without having an account in that bank,” Oziegbe said.
In Nigeria, customer’s account preferences depend majorly on the customer’s need and literacy level. “Majority of educated customers,” noted Oziegbe, “have both savings and current account, whereas, the “uneducated” customers mostly have just savings account as they assume current accounts are for the rich.”
The current ratio of current account holders in Nigeria is very low at 70:30 – 70% savings and 30% current account. The challenge of most customers in choosing current account is the cost of maintenance. “Cheque book charges and COT fee also discourage them,” Oziegbe said.
The COT was supposed to be phased out in 2016 but some banks still charge the fee.
There are variations of current accounts depending on the bank. Fidelity Bank for instance has a normal or standard type, which comes with standard features, including charges. Hybrid savings is in-between a savings and a current account; it has interest accruing to the customer and a chequebook, which does not go for clearing. The salary current account is for salaried customers and comes with certain advantages.
“The reason for the differentiation is documentation. For example, to open a standard current account, you will need two references, a utility bill and an acceptable means of identification like National ID, drivers license or voters’ card. But a hybrid savings account requires only one reference” said Oziegbe.
Your current account will work for you if you pay attention to your turnover, which you can use to negotiate the maintenance fee, a bank charges on the account. Negotiation will help you reduce the cost of maintenance fee. “Negotiation is a right of the customer mandated by the CBN. The reality is, the market is very competitive and every bank is looking to retain and attract new customers, so they are open to negotiate the fee.”