Are you wondering what a savings account is? Here is a complete guide to savings accounts for beginners.

Banks typically offer two main types of accounts: savings accounts and current accounts. Although there are other types of accounts, these are the two main types you need to understand for now.

So what’s the difference between the two? Savings accounts are accounts where you can keep money that you don’t intend to spend. When you keep money in a savings account, your bank will pay you interest on it. You can think about interest as being a type of profit. It is usually calculated as a percentage of your deposits.

So, for example, if you make a deposit of 50 thousand naira and your bank offers an interest rate of 10%, you would earn 5 thousand naira by the end of the year if you do not withdraw from this sum.

Current accounts, on the other hand, are accounts where you can keep money that you intend to use for pressing needs. For example, if you run a business, you’ll need a current account for your current expenses like utilities, salaries, taxes, and so on.

So which type of account should you open? If you’re just looking to keep some money away, then it’s best to open a savings account. This is because your bank will pay you some interest on your savings when you use a savings account. On the other hand, the bank will charge you some fees when you use a current account.

Now that you understand what savings accounts are and how they differ from current accounts, let’s talk about the different types of savings accounts and which one is best for you.

Types of Savings Accounts

Basic Savings Accounts

The basic savings account is essentially what we’ve described above. This is an account where you keep money and receive interest payments on this money over time. 

Specialty Savings Accounts 

Speciality savings accounts are not very different from regular savings accounts. These are simply savings accounts that are dedicated to specific goals such as student savings accounts that allow you to save towards your school fees or those of your children. 

You can also have other types of speciality savings accounts like retirement accounts. These accounts usually have stricter rules and you may not be permitted to make frequent withdrawals from them. 

High-Interest Savings Accounts

High-interest savings accounts are also just regular savings accounts except that they offer unusually high interest rates. This makes them an excellent way to save since your money will grow faster over time. 

For instance, while the average interest rate on savings accounts with conventional banks might be around 3-7% depending on economic conditions at the time, Bold, a leading fintech app, offers as much as 15% interest on savings.

Another difference is that high-interest savings accounts tend to be more frequently found on fintech apps like Bold instead of conventional banks. 

The sign-up process is also much easier with Bold than it is with regular banks. All you have to do is download the app from the Google Play Store or IOS Store, create an account and get verified. 

Then you can fund your account by making a transfer from your existing bank account if you have one, or by making a deposit with a Bold executive agent if you don’t already have a bank account.

That’s it! That’s all you need to know about savings accounts and whether you need one! If you have questions, please let us know in the comments section below. And if you’d like to learn more about how to get started, simply reach out to our customer care representatives here. We can’t wait to hear from you!