In the last two episodes, we outlined the fees banks are permitted to charge on typical Current Account transactions and explained how these charges apply depending on the transaction channel, whether across the counter, via ATM or through electronic transfers.

 In summary, a Current Account holder who withdraws N100,000 cash through the ATM of another bank located within the premises of his bank may pay as much as N506.45 more in charges than if the same amount were withdrawn across the counter at any branch of his bank.

This episode shifts focus to Savings Accounts and the fees applicable to them.

Unlike Current Accounts, banks are mandated by the Central Bank of Nigeria (CBN) to pay interest on Savings Accounts. The interest rate must not be less than 30 per cent of the Monetary Policy Rate (MPR), which is the benchmark interest rate set by the apex bank. With the MPR currently at 27 per cent, the minimum interest rate payable on Savings Accounts is 8.1 per cent per annum.

In practical terms, this means that if a customer has a balance of N100,000 in a Savings Account at the end of the month, the bank should pay interest of N8,100 per year, which translates to N675 monthly.

However, interest payment on Savings Accounts is not automatic. According to CBN regulations, customers who make more than four withdrawals in a month are not entitled to earn interest for that period. This rule was introduced to discourage abuse of Savings Accounts. In the past, many customers used Savings Accounts for frequent transactions in order to avoid fees associated with Current Accounts. A Savings Account, by design, is intended for saving and accumulating funds over time rather than frequent withdrawals.

In terms of charges, banks are not allowed to impose Account Maintenance Fees on Savings Accounts. Nevertheless, some transaction-related charges are permitted. These include fees for ATM withdrawals via other banks, electronic transfer charges, SMS alert fees and Stamp Duty levies.

For instance, if a customer withdraws N100,000 from a Savings Account through his bank’s ATM or across the counter at his bank, the transaction attracts only N6 as SMS alert fee and N0.45 VAT, bringing the total charge to N6.45.

If the same customer transfers N100,000 to another account in a different bank, the transaction attracts N6 SMS fee, N0.45 VAT, N50 Electronic Transfer Fee, N3.75 VAT on the transfer fee and N50 Stamp Duty levy. The total charge in this case amounts to N110.20.

The highest charges apply when cash is withdrawn through the ATM of another bank located within the premises of Bank B. In this scenario, the total fee comes to N512.