Key points to note before opening a domiciliary account – A domiciliary account is a type of current account that allows you to fund it with foreign currencies such as dollars, pounds or euros and enables you to do foreign transactions on that account. You can use a domiciliary account to transfer money to another country or receive foreign currency from another country.
According to jotscroll.com, a domiciliary account is just like a current account that is used for the purpose of transacting business. It is not intended for saving of money, but rather it is supposed to help you carry out your business transactions using foreign currencies.
With a domiciliary account, you will open the account with your bank in the country where you live. Once the account is opened, you can then start using it. The account number will be sent to your email or your telephone number.
After getting the account number, you can then give it out to the person that will send money to you abroad with some additional details. If it is a dollar account, the money will be sent in dollars, this means that the person sending you the money must send it in dollars. Once you receive your alert, you can go to your bank and withdraw the dollars by filling your foreign currencies withdrawal slip. The dollars will be given to you and then you can proceed to change it to your local currency (which is naira in Nigeria) at the bureau de change.
The bureau de change is just an office that buys dollars from you and gives you naira in exchange or they can sell dollars to you and you give them naira in exchange. What they basically do is to change whatever currency you need whether from local currency to foreign or from foreign currency to local.
What type of foreign currencies can I use in my domiciliary account?
Depending on the country that you are based in currently, you can use any foreign currency in your domiciliary account, but it also depends on the currencies your banks offer in your country. Most times, the banks make use of the most widely used currencies which may include the United States dollars, British pounds or euros. These currencies are widely accepted in most countries and can be used as means of exchange.
This means that, if you are using a bank in Nigeria, then the domiciliary account cannot be funded with naira currency but with a different currency.
The best way to know the currency to use in your domiciliary account is to know the purpose for which you open the account. If you open the account for receiving from a transaction, then know the currency that would be used for paying you first before you even open the domiciliary account. Always confirm that currency with your bank before you proceed to open the account.
How to receive foreign currency using your domiciliary account
Yes, you can receive payments into your domiciliary account from another country using wire transfer. There are many methods used for sending and receiving foreign currencies; you should always ask with your bank’s customer care to know the type they accept.
Depending on the method of transfer used, your domiciliary account will be credited with the corresponding amount of foreign currency within the stipulated time for the method of payment used. Payments through wire transfer from the United States could take two or three working days to reflect in your dollar domiciliary account, starting from the day the money was sent.
Please note that Saturdays and Sundays are not working days and are not included. Public holidays are also not included. This means that if the money was sent on Wednesday, while Thursday and Friday happen to be public holiday, you will not receive the money until Tuesday or Wednesday.
Other methods could be faster but generally, the faster the method, the more the fee you are charged.
Charges may vary according to the type of transactions done, but the charges depend on your bank.
Can you pay or transfer money online using domiciliary account?
Yes, you can transfer money from your domiciliary account to another domiciliary account abroad or within your country. Depending on your bank, you could be charged a fee for this. All you need to do is to fill out the transfers form and enter all the details of the account you want to transfer the money to; hand the cash to the bank staff and the money would be sent as appropriate.
Can you receive money with a different currency to your savings account?
It depends; some banks can allow you to use your savings account to receive payments or receive money from a different country. If your bank offers this, then it is pretty easier than going through the stress of opening a domiciliary account, though using a domiciliary account gives you better flexibility over your money and more profit than using your local currency savings account.
All you need to do is to give your savings account to the person. Once the money is deposited, no matter the currency used, it will be converted to your country’s currency using the official bank rates. The exchange rates may also depend on your bank. In Nigeria, when the naira was fixed at N197 to a dollar, it means that when the money is sent to your savings account, it will be converted at N197 to one dollar; if you received 100 dollars, it means then that your bank will convert it to N19,700 (Nineteen thousand, seven hundred naira). But with the floating exchange rate recently introduced by the Central Bank of Nigeria, your bank will determine how much you will be paid and you cannot alter this.
That means, your bank may exchange it at N100 to a dollar or they could exchange at N50 to a dollar. The banks will always want to make profit from your money, this is the reason why you need a domiciliary account as I will explain the uses below.
Advantages of having a domiciliary account
A domiciliary account gives you lovely benefits that will make life easy for you when you are dealing with any transaction that is international. It has the following uses/functions:
- You can receive direct foreign currencies
- You can pay for international transactions
- It gives you more control over unstable currencies
- You can serve as a referee for someone
Disadvantages of a domiciliary account
- You are restricted to one type of currency per account
- It is difficult to get referees as explained above, as most people use savings account. The few with current account use it for salaries and banks do not accept salary accounts! Reason best known to them.