Target savings account is one of the products offered by deposit money banks and other financial institutions like microfinance banks. The product allows customers to save towards specific project over a period of time.
To encourage savings culture and promote financial inclusion, these financial institutions pay interest rates on their savings products offerings.
Out of 10 banks compared by Options Finder Nigeria limited, Union Bank with a target savings product called Uniongoal offers higher interest rate at 7.30 percent per annum. This is followed by Skye Bank which has Skye Wise account as its target savings product, offers on annual basis 6 percent interest rates.
Access target savings account offers 5 percent interest rate to consumers while Access premier savings account and Wema Bank smart save account offer 4.20 percent each to their customers.
Access Bank product requires minimum savings period of six months (partial/full withdrawal prior to six months attracts interest forfeiture for the quarter withdrawal was made). Debit cards cannot be issued on the account.
Customers who operate GT target account will earn 3.60 pecernt as interest rate per annum while FCMB target account offers between 3.30 and 3.60 percent interest rate per annum.
Other banks which interest rates are not disclosed includes Diamondextra, Keystone bank premium savings certificate, Sterling recurring deposit account, Unity Target savings account, and Unity target savings account.
The Central Bank of Nigeria (CBN) had in April directed that all deposit money banks pay their customer minimum of 30 per cent interest rate per annum on savings account deposits.
However, the 30 per cent interest rate is not applicable if a customer makes more than four withdrawals in a month, explained Kevin Amugo, director, financial policy and regulation department, CBN.
In Diamondextra Interest is forfeited if more than 3 withdrawals are made in a month. The DiamondXtra account is designed for individuals who want to build up their savings gradually.
It is an interest-yielding savings account, which allows the deposit of both cash and third party cheques. In addition, cash can be withdrawn from any ATM, and over the counter using your DiamondXtra chequebook from any of Diamond Bank branches.
Wema Bank smart savings account offers Bonus interest payment at 20 percent of normal savings rate for non-withdrawal in three months subject to terms and conditions. However, withdrawal before target date will lead to loss of bonus interest for the period.
It is an account that enables saving at customer’s pace and convenience towards achieving a particular goal or financial target. Customers have the freedom to choose savings objective, target savings amount and tenor. It has minimum saving tenor of six months and maximum tenor of 36 months.