Bank Account Maintenance Charges are not as insignificant as they seem. Some debit alerts are termed to be insignificant, but not with the law of compound interest. Some of these banks make a fortune from some of these charges.
Account maintenance and other unsolicited bank charges have been a major pain in the neck of bank customers. Especially when the monthly charges of these unsolicited debits, falls short of the total interest you get on your account.
However, on several occasions, bank customers complain about incessant account maintenance charges. This insignificant charge compounds to a significant portion of the bank’s non-interests income. Perhaps a significant revenue stream, imagine N18.4 billion for tier-1 banks (First Bank, UBA, GTB, Access, and Zenith) for Q1 2020.
These tier-1 banks generated a total of N18.4 billion which is a significant sum. With Zenith bank topping the chart with N5.7 billion earning. Access bank following the lead with N3.9 billion earnings. Guarantee Trust Bank isn’t left out of the pack with a sum of N3.3 billion earnings. First Bank also generated a whopping sum of N3.1 billion, while UBA smiled with the sum of N2.3 billion.
What do you need to know?
CBN recently reviewed some of the bank charges, in a bid to encourage the use of electronic banking and enhance financial inclusion.
Recently, CBN reduced charges applicable to bank accounts, electronic transfers, and Automated Teller Machines (ATM). Here are some of the changes:
- Electronic transfers below N5,000 will attract a maximum charge of N10; transfer from N5001 – N50,000 = N25; and transfers above N50,000 =N50.
- Card maintenance fee on current accounts has been removed as the accounts already attract the account maintenance fees. Savings accounts will now attract a card maintenance fee of N50 per quarter from N50 per month.
- The annual card maintenance fee on foreign currency (FCY) denominated cards is reduced to $10 from $20.
- ATM charges are reduced to N35 after third withdrawal within a month from N65
- The charge for hardware token will on cost recovery basis be subject to a maximum of N2,500 from the previous maximum charge of N3,500
- Fee for SMS mandatory alert will be on cost recovery from the previous maximum charge of N4.
- Bill payment via e-channels will attract a maximum charge of N500 from 0.75% of the transaction value subject to a maximum of N1,200.
CBN Directive On Current Account
However, based on some of the revised guide to charges by Banks, other financial and non-bank financial institutions, it is clearly stated that Nigerian banks are to charge N1 for every N1,000.00 debit transaction on current accounts. This is sometimes disguised as COT (Commission on Turnover) – service charge on customers based on withdrawals. More so, based on the directives, these current accounts should in no way be charged for card maintenance fees.
Stay informed and take charge
Banking is said to be the lifeblood of capitalism, but meticulous knowledge about insignificant charges can save you a fortune. Take charge of your finance and be aware of your institution’s monetary policy.