For many bank customers in Nigeria, operating a savings account may not feel like they are saving money with the barrage of charges that are slammed on them by the banks. This is especially as banks regularly declare billions in income from the said charges.
Last year, 10 deposit money banks in Nigeria had jointly made N296.87 billion from electronic banking charges as well as account maintenance charges pulling in N980.52 billion in profit after tax. Zenith Bank, Wema Bank, First City Monument Bank, Fidelity Bank, Guaranty Trust Holding Company, United Bank for Africa, Sterling Bank, Access Bank, Stanbic IBTC and Ecobank Transnational Incorporated had jointly made the N980.52 billion profit, an increase of 18 per cent over N830.8 which they jointly made in 2020.
In 2020, despite the pandemic and the downturn in economic activities, 12 commercial banks had jointly pulled in N933.16 billion in profits and made N216.52 billion from charges on electronic transactions, as customers continue to complain of excessive fees that they are being charged to make the banks richer.
Asides the electronic banking charges, and account maintenance charges that customers have to pay, they are also saddled with Stamp duty and card maintenance charges. In December 2019, the Central Bank of Nigeria had issued a revised guide on bank charges which became effective on January 1, 2020. The guide had made some major cuts in fees that banks charge their customers, one of such is the reduction in electronic transactions.
According to the guide, electronic transfers of N5,000 and below will have a N10 transactions cost plus VAT and transfers of above N5000 but below N50,000 now attract N25 charges plus VAT, while transfers above N50,000 attracts N50 charge plus VAT. The charges on electronic transfers had been cut from N50 which most banks were charging.
As against the N65 previously charged by banks after third withdrawals on remote-on-us ATM transactions, the CBN had insisted that bank do not charge above N35 per withdrawal. However, customers complain that they are still charged N65 and some banks make the charge on every remote-on-us withdrawal irrespective of if it is the first or second in the month.
Also, maintenance charges on cards was cut from N600 spread through the year to N200, a N400 shave off from what card holders would have to pay banks on an annual basis. This means that for cards linked to savings account, maintenance fee has been reduced to a maximum of N50 per quarter from N50 per month amounting to only N200 per annum instead of N600.
Also, maintenance charge for foreign currency card holders was also cut down to $10 or its equivalent from the previous charge of $20 yearly. Other major changes in the charges include removal of Card Maintenance Fee (CAMF) on all cards linked to current accounts, a maximum of one naira per mille for customer induced debit transactions to third parties and transfers or lodgments to the customers’ account in other bank on current accounts only.
However, bank customers have continually lamented the burden of charges which they say silently erodes their savings. While some overlook it, some others are yet to come to terms with the amount they are charged.
For current account holders, they have to bear the charges as stipulated in the Guide to Bank Charges but for many Savings Account holders, they are not reaping the benefits of having a savings account.
As at December 31, 2021, which is the latest data provided by the Nigeria Inter-Bank Settlement System (NIBSS), total bank accounts in the country stood at 191.4 million of which 122.3 million of them are active. Total savings account was 120.4 million, while current accounts stood at 49.8 million.
However, with many bank customers running their savings accounts like a checking or current account, they end up not realising the benefits of having a savings account. Recently, the CBN had revised upward the interest rate payable on savings.
With the revised rate, bank customers in the country are now to be paid more interest on their savings minimum interest payable moved from 10 per cent of the Monetary Policy Rate (MPR) to 30 per cent.
At its last meeting in July, the Monetary Policy Committee of the CBN had raised MPR to 14 per cent. Consequently, banks were expected to increase interest rate on savings from 10 per cent of MPR to 30 per cent of MPR with effect from August 1, 2022. With this change, bank customers can now earn up to 4.2 per cent which is 30 per cent of the 14 per cent MPR as against 1.4 per cent which was 10 per cent of the MPR.
The interest payable on the savings account is however subject to conditions as stipulated by the banks. For some banks, interest is payable on savings if the customer does not do more than four withdrawals in a month, while for some others three or two withdrawals within a month invalidates the savings account from earning an interest.
With the Guide to Bank charges, customers are also charged when they make more than three withdrawals on ATMs that do not belong to their bank. As such when a savings account customer makes more than three transactions from his account, he not only losses his interest but also has to pay charges to the bank for the transactions done.
This has led many young Nigerians who are wary of the several charges being deducted from their accounts, to switch from the traditional banking platforms to FinTech which they believe would charge them less for saving.
Speaking recently at the launch of the Millennial & Gen Z Banking Survey Report by the FITC, CBN Deputy Governor, Financial System Stability, Aisha Ahmad stressed the need for bank to reduce charges as a way to attract more millennials and GenZ into the formal financial sector.
According to her, “The CBN provides guidelines on the maximum amount financial service providers should take. Our expectation is that as they continue to use shard services because the conversation on charges is the cost of providing financial services.
“So as the costs reduce, we expect that those costs reduction should be passed on to customers and that should encourage more people to patronise the system. We continue to encourage banks to share services, to be more efficient by using technology and with that efficiency comes savings and we expect that savings to impact positively.”
