If you are looking to grow your money faster, the article below on three of Nigeria’s high-yield savings accounts for 2023 will help you.
One primary goal of saving money is to earn interest while meeting your goals. However, some savings accounts offer a much higher return than others. Known as high-yield savings accounts, they apply much higher interest earnings to your savings.
For this reason, people store their cash in a high-yield savings account to reach their goals more quickly.
What are high-yield savings accounts?
High-yield savings accounts are different from traditional savings accounts in the sense that they reward you with a higher interest rate.
High-yield savings accounts in Nigeria allow your money to grow even faster as it sits in your account.
The interest rate that these accounts offer is noted as the APY, or annual percentage yield. The higher your APY on a particular savings account, the faster your money grows
The APY that savings accounts offer when you sign up can change at any time. These rates are variable and often go up or down in line with the Central Bank of Nigeria changing its benchmark interest rate.
Not only does your money earn a better return in a high-yield savings account, but you still have access to your cash when you need it as you would in a normal savings account.
How high-yield savings accounts work
Most high-yield savings accounts in Nigeria operate a compound interest which allows your savings to grow quickly.
Compared to simple interest – compound interest means you earn interest on both your principal balance and the interest it earns. With simple interest, it is just calculated based on your principal, or the balance you have in your savings minus interest.
How often your interest is compounded depends on the savings account. Some compound daily, while others compound monthly. The more your interest compounds, the greater your return.
You can withdraw or transfer money out of your account up to four times a month without having to pay a penalty fee with a high-yield savings account,
Online banks that operate high-yield savings accounts do not have the overhead costs that traditional banks have to account for, so they may offer a higher APY.
Benefits of high-yield savings accounts
If you are saving towards a goal, one of the fastest ways of meeting your target is via a high-yield savings account.
Not only do they offer higher interest rates, but they also come with several benefits including;
With a high-yield savings account, you don’t take on any risk depositing your cash. They are insured by the Nigerian Deposit Insurance Commission (NDIC)
With these accounts, your money is safe if something were to happen, such as a run on the bank.
Unlike other savings accounts, you can make a number of withdrawals on high-yield savings account monthly without incurring any penalty.
The money sitting in your high-yield savings is accessible if you ever need to tap into it.
Also, savers can quickly transfer their money between their high-yield savings accounts and other bank accounts.
The best high-yield savings accounts come with no additional costs, such as monthly fees, and minimum deposits and balance requirements.
Downsides
Although they come with loads of benefits, high-yield savings accounts also have a few disadvantages.
Some of them include;
Interest rates on high-yield savings accounts are variable and can fluctuate at any time. So while a bank may advertise a high Annual Percentage Yield (APY) when you apply, it likely won’t last forever.
While you can grow your money daily and take on zero risk with high-yield savings, they are not the best way to increase your wealth long-term.
The rate of inflation can be higher than the yield you earn over time, so it’s better to not keep piling cash into your savings and instead invest your money.
Yes, your savings are accessible, but only up to a certain number of withdrawals before you’re hit with a fee.
Most high-yield savings accounts restrict the number of times you can access your cash each month.
Best High-Yield Savings Accounts In Nigeria
Here, we’ll be looking at three of the highly rated high-yield savings account in Nigeria run by traditional banks.
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Stanbic – MaxYield Account
MaxYield Account, a product of Stanbic IBTC offers accelerated savings with the option of partial withdrawals for emergencies along the way
To open this account, you will need a ₦ 10,000 minimum deposit.
It also offers depositors the option of operating the account via its mobile app, meaning, there is no need to go to a branch.
This account comes with up to 0.5% bonus interest on your savings.
Opening the account requires you to provide two recent passport photographs of each signatory to the account, a signatory’s valid ID like a driver’s license, International passport, National ID, or voter’s card as well as the BVN of all Signatories.
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Fidelity High Yield Savings Account
The Fidelity High Yield Savings Account offers you a great investment opportunity to make your money grow in the long term.
Run by Fidelity Bank, you can open this account with a minimum operating balance of ₦5,000.
Its tiered interest rates are based on a threshold of 4.95% p.a for savings below ₦ 100,000, to 6.95% p.a for ₦ 200m and above.
Its regular monthly interest is not applicable if a customer makes more than three withdrawals in a month.
To open the account, you will need one completed reference form, a valid means of identification, a utility bill, and one passport photograph,
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FCMB Premium Savings Account
This product of First City Monument Bank enjoys the benefits of a savings account that offers competitive interest rates and the flexibility to issue third-party cheques.
With an account opening balance of ₦ 100,000, it allows third-party over-the-counter withdrawals. It also allows the lodgement of clearing instruments, including dividend warrants.
It can also be operated as an individual or a joint account.
The minimum age for opening this account is 18 years and new customers would require one satisfactory reference, and proof of identification such as an International Passport, Driver’s License, National ID card, or Voters Card.
You would also need a copy of a receipt from any public utilities, and one passport photograph of each authorized signatory.
For non-Nigerian applicants, a copy of a resident or work Permit is required.
How to get the best savings interest rates
Maximizing the interest you get on your savings is one of the easiest money challenges you can take on.
The essential factors to weigh include in deciding what high-yield savings account to settle for in Nigeria include;
A high-yield savings account pays more than a traditional savings account.
Avoid paying a monthly maintenance fee because it diminishes your earnings.
Most people’s needs are met with online access, but it might take a day or two for transferred funds to reach your account if that account is at a different financial institution.
For immediate access, always find a savings account with a debit card and fee-free ATM withdrawals at machines near you.
Compare interest rates and save here
