The Difference Between Savings Account and Current Account in Nigeria

Last updated on September 8th, 2023 at 12:03 am

What is the difference between savings account and current account in Nigeria?


As a seasoned financial expert, I understand the pivotal role that financial accounts play in shaping an individual’s or business’s financial stability. In this comprehensive guide, we will delve into the significance of these accounts and shed light on the specific when it comes to differentiating a savings from a current account within the Nigerian financial landscape.

Most people are often confused on the type of account to open when they visit a bank in Nigeria. You often meet the bank’s customer care agent to clarify this issue. Well, this post will explain the difference between a savings account and a current account, and clear the confusion between these popular account type used in Nigeria.



A savings bank account is the most widely recognized sort of deposit account in Nigeria that requires little or no capital to open. From the name, the purpose of creating such an account in any commercial bank in Nigeria is to save. Although, there are some transactions in these type of account that is limited when compared to current account.

The advantage of using a savings account is that it gives a variety of bank services such as ATM Debit Card facility with distinctive variations, allocation of some percentage of interest to such bank account, internet banking, online cash exchange, mobile banking and so on.  All these services are guided by the bank’s terms and conditions which includes a number of cash withdrawals using the ATM.

You might want to know the disadvantage of opening a savings account in Nigeria, even though it has so many advantages. One pitfall is that you don’t have the benefits of having a cheque book and third-party transactions are not available for savings account (financial institutions like Diamond Bank offers an exception to this), limited withdrawals via ATM, unable to withdraw all the money in the account, e.t.c.

When considering the difference between a savings account and a current account in Nigeria, it’s crucial to start by understanding what a savings account is and its primary purpose.


A savings account is a type of bank account designed primarily for the purpose of saving money. It allows individuals to deposit their funds with a financial institution, such as a bank, with the expectation of earning interest on those funds over time. Savings accounts are typically intended for long-term or medium-term savings goals rather than daily transactions.

The primary purpose of a savings account is to encourage individuals to save money for future needs, emergencies, or financial goals. It provides a safe and secure place to store funds while offering a modest interest rate to help those funds grow over time.


  1. Interest rates: In Nigeria, savings accounts generally offer competitive interest rates, although they may vary between banks. These rates are typically higher than what you would receive in a current account, making savings accounts an attractive option for those looking to grow their money passively.
  2. Minimum balance requirements: Most savings accounts in Nigeria have minimum balance requirements, which means you need to maintain a certain amount in the account to earn interest and avoid fees. These requirements vary from bank to bank, so it’s essential to choose an account that aligns with your financial capacity.
  3. Accessibility and withdrawal limits: Savings accounts are designed to promote saving, so they often come with restrictions on withdrawals. While you can access your funds when needed, there may be limits on the number of free withdrawals or the minimum notice period required for withdrawals.


  1. Interest earning potential: Savings accounts offer the advantage of earning interest on your deposited funds, helping your money grow over time and combatting the effects of inflation.
  2. Safety of funds: Funds held in savings accounts are generally considered safe as they are protected by deposit insurance schemes in Nigeria, ensuring that even in uncertain financial times, your savings remain secure.
  3. Financial discipline: Having a dedicated savings account encourages financial discipline and helps individuals establish a savings habit, making it easier to achieve long-term financial goals.


  1. Limited access to funds: Savings accounts often have restrictions on the number of withdrawals or may require a notice period, making them less suitable for frequent or urgent transactions.
  2. Lower interest rates compared to other investments: While savings accounts offer a safe way to grow your money, the interest rates are typically lower than what you could earn through more aggressive investments, such as stocks or bonds. Therefore, they may not provide the highest returns for long-term wealth accumulation.


A current or business account, is a type of account in Nigeria that is suitable for businesses as you have the freedom of unlimited number of withdrawals for running your daily transactions. This kind of account can be opened by an individual doing large scale businesses, company, firms, organizations and so on. Unlike the savings account, which requires little or no cash to create, current account requires a certain amount of deposit to create after which money can be withdrawn anytime till zero. It can also be called “Demand deposit account” or “transactional account.”

When you open a current bank account, you have access to direct debits, internet banking, overdraft facility, transfers and so on. An advantage of current account over savings is that any amount can be withdrawn or deposited whenever you want without giving any notification, you can withdraw all your monies,  cheque books and third-party withdrawals (payee) are also available.

In Nigeria, a current account is a financial instrument offered by banks that provides account holders with a high degree of transactional flexibility. It functions as a secure repository for funds while allowing easy access for daily financial activities. Current accounts are often used for business and personal purposes alike, offering a range of features tailored to meet the dynamic needs of the account holder.

The primary purpose of a current account in Nigeria is to facilitate daily financial transactions. It serves as a hub for managing funds related to routine expenses, bill payments, and business operations. Unlike savings accounts, which are designed for long-term savings, current accounts are ideal for individuals and businesses that require frequent access to their funds to cover expenses, pay suppliers, and manage cash flow effectively.


  1. Transaction FlexibilityCurrent accounts in Nigeria offer a high level of transaction flexibility. Account holders can make an unlimited number of deposits and withdrawals, which is essential for businesses that engage in numerous financial activities daily. This flexibility ensures that funds remain easily accessible for various financial needs.
  2. Overdraft FacilitiesMany current accounts in Nigeria come with overdraft facilities, allowing account holders to temporarily withdraw funds exceeding their account balance. This feature can be valuable for businesses facing short-term cash flow challenges or individuals dealing with unexpected expenses. However, it’s essential to note that overdrafts typically incur interest charges.
  3. Fees and ChargesCurrent accounts may have associated fees and charges, including maintenance fees and transaction fees. These fees can vary between banks and account types, so it’s crucial for account holders to be aware of the fee structure associated with their specific current account.


  1. Convenient for Daily TransactionsCurrent accounts are highly convenient for daily financial transactions, making them suitable for individuals and businesses that need constant access to their funds. This convenience streamlines financial operations and ensures that bills, salaries, and expenses can be managed efficiently.
  2. Overdraft FacilitiesThe availability of overdraft facilities in current accounts provides a safety net for unexpected expenses or temporary financial challenges. It allows account holders to bridge gaps in cash flow without resorting to more expensive forms of borrowing.
  3. Business UseCurrent accounts are especially well-suited for businesses, as they support the seamless flow of funds for payroll, supplier payments, and operational expenses. They also help maintain a clear separation between personal and business finances, which is crucial for financial transparency.


  1. Limited or No Interest on BalancesOne significant drawback of current accounts in Nigeria is that they typically offer limited or no interest on the account balances. This means that funds held in a current account do not generate significant returns over time, making them less suitable for long-term savings goals.
  2. Maintenance FeesCurrent accounts may have maintenance fees that account holders need to pay regularly. These fees can vary among banks, and individuals should carefully consider the cost structure when choosing a current account to minimize expenses.
  3. Risk of OverspendingThe easy accessibility of funds in a current account can lead to the risk of overspending, especially for individuals who struggle with budgeting. Without the interest-earning incentive of a savings account, it’s important for account holders to exercise discipline to avoid excessive spending and maintain a healthy financial balance.

Below is a better analysis to help understand the contrast that exist between a savings account and a current account.

Feature Savings Account Current Account
Target Audience Individuals, especially salaried individuals Companies and business owners requiring frequent transactions
Interest on Deposits Earns interest based on deposited amount Typically, no interest on the deposited amount
Minimum Opening Balance Requires a smaller initial deposit Requires a higher initial deposit
Overdraft Facility Generally not available for individuals Overdraft facility is available for current account holders
Withdrawal Limitations Limited withdrawals allowed Unlimited withdrawals are available
Issuance of Passbook A passbook is issued to individuals Passbooks are not typically issued to businesses or companies using a current account
  1. Saving account is best for individuals or better still salaried individuals while current account is best for companies or business man where more than one transaction is required.
  2. In savings account, there is a percentage of interest based on deposited amount while in current account, no interest is there on deposited amount.
  3. To open a savings account, smaller amount is required, while in opening a current account, higher amount is required.
  4. In saving account, no facility of overdraft is available for individuals while facility of overdraft is available for current account holders.
  5. In a savings account, limited withdrawals are available while unlimited withdrawals are available for current account holders.
  6. In saving account, pass book is issued to individuals while pass books are not issued to businessmen or companies using current account.


When selecting a bank account in Nigeria, several factors should be carefully considered to ensure it aligns with your financial goals and needs. Here are the key factors to keep in mind:

  1. Account Type: Decide whether you need a savings account, a current account, or a specialized account (e.g., fixed deposit, foreign currency account). The type of account should match your financial objectives.
  2. Interest Rates: For savings accounts, compare the interest rates offered by different banks. Look for competitive rates to maximize your savings.
  3. Fees and Charges: Understand the fee structure associated with the account, including maintenance fees, ATM fees, transaction fees, and penalties. Choose an account with reasonable fees that suit your usage patterns.
  4. Minimum Balance Requirements: Some accounts require a minimum balance to be maintained. Ensure you can comfortably meet this requirement to avoid penalties.
  5. Accessibility: Consider the bank’s branch and ATM network. Choose a bank with convenient access points based on your location and travel needs.
  6. Online and Mobile Banking: Evaluate the bank’s digital banking services. Look for a bank with user-friendly online and mobile banking platforms for easy account management.
  7. Customer Service: Assess the quality of customer service provided by the bank. Check reviews, ask for recommendations, and ensure the bank is responsive to customer inquiries and issues.
  8. Overdraft and Credit Facilities: If you anticipate needing overdraft or credit facilities, inquire about the terms and availability of these options.
  9. Account Security: Ensure the bank has robust security measures in place to protect your account and personal information.
  10. ATM Network: Consider the availability of ATMs and whether you’ll have easy access to fee-free ATMs.
  11. Special Features: Some accounts come with additional features like insurance coverage, discounts, or rewards programs. Determine if these extras align with your needs.
  12. Interest Payment Frequency: For savings accounts, check how frequently interest is credited (e.g., monthly, quarterly, annually).
  13. Account Statement Frequency: Understand how often you’ll receive account statements and whether they are available digitally.
  14. Account Opening Requirements: Review the documentation and identification required to open an account. Ensure you have the necessary paperwork.
  15. Bank Reputation and Stability: Research the bank’s reputation, financial stability, and history. A well-established and reputable bank can provide peace of mind.
  16. Regulatory Protections: Verify that the bank is registered with the Central Bank of Nigeria (CBN) and insured by the Nigeria Deposit Insurance Corporation (NDIC) for deposit protection.
  17. Account Terms and Conditions: Carefully read and understand the terms and conditions associated with the account, including withdrawal limits, transaction limits, and any restrictions.
  18. Future Needs: Consider your long-term financial goals and whether the chosen account can accommodate your evolving financial needs.


The requirements for opening both savings and current accounts in Nigeria generally include:


  1. Valid Identification: You will need a valid means of identification, such as a National Identity Card, International Passport, Driver’s License, or Voter’s Card.
  2. Proof of Address: Banks may require proof of your address, which can be provided through utility bills, rent agreements, or official letters.
  3. Passport Photographs: You typically need passport-sized photographs for your account application.
  4. Minimum Opening Deposit: Most savings accounts require a minimum opening deposit, which varies among banks. This amount can be relatively small.


  1. Valid Identification: Like with savings accounts, you will need a valid means of identification, such as a National Identity Card, International Passport, Driver’s License, or Voter’s Card.
  2. Proof of Address: Proof of address is also required for current accounts. Utility bills, rent agreements, or official letters can be used for this purpose.
  3. Passport Photographs: Passport-sized photographs are typically needed for your current account application.
  4. Business Documentation (for business current accounts): If you’re opening a current account for your business, you’ll need additional documentation, including your business registration certificate, tax identification number (TIN), and any other business-related documents.
  5. Minimum Opening Deposit: Current accounts often require a higher minimum opening deposit compared to savings accounts. The amount can vary significantly depending on the bank and the type of current account.
  6. Resolution for Account Opening (for corporate accounts): In the case of corporate accounts, a resolution from the board of directors or a similar authorization document may be required.
  7. Signatories: For business current accounts, specify who will be the authorized signatories on the account and provide their identification and signature specimens.


Those are the differences between savings account and current account. You might also want to find out among the banks that offer the best savings and current account in Nigeria for you to make your choice.

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Oluchi Chukwu

Oluchi is a seasoned Information blogger, content developer and the editor of Nigerian Queries. She is a tech enthusiast who loves reading, writing and research

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