Heard about target account?
Maybe probably no.
As i got to discover that not many Nigerians know about the target saving account.
Basically, it just like the normal savings account, but with a different.
It is a type of account that helps an individual to save for a project, any type of project that you want to embark on.
What is a target account
Target account is a type of savings account, but with a high interest rate usually from 3 to 5 percent, which helps to encourage financial discipline and to help an account holder safe for a project.
What type of project i’m talking about?
It can be buying a new car, building a house, savings for a wedding, college or university, or even buying a new laptop.
Any type of project that you want to embark on, but have a problem with savings, target account comes to your rescue.
Is never too late, you can decide that by December 31st, i want to save up to one million naira from my salary.
Do you think you can achieve that with your normal savings account?
Maybe not, as you will be tempted to take some amount of money for one thing or the other.
Issues may arise and you might not be able to save up to N500,000.
If you’re a man who loves to go to the beer parlour or clubbing, you will see yourself spending up to N100,000 in a day or just one night.
Even for the ladies that are shopaholic!!
You’ll see a nice beautiful gown on jumia, and in a twinkle of an eye you’ve use your naira debit card to order for the gown.
Even if you don’t have a project to embark on, it is good to save especially for the rainy days.
You can tell yourself that from this month of April till December 2020, that you want up to half a million or one million probably.
There are many ways to achieve that my brother or sister as long as you’re a salary earner.
Or maybe you earn on daily or weekly basis.
You don’t have wait for someone to tell you that you should remove a sum amount of money, and save it on target savings account.
I don’t know if you guys really got the explanation?
Let me elaborate further on how it works.
How target savings account works
Like i said, it is a type of savings account, which helps an individual or person, to achieve their financial goal.
How does it work?
Just like the normal savings account, you can open your account with five thousand, ten thousand, twenty thousand or even fifty thousand naira.
The minimum amount depends on the bank that you want to open your target account.
Let me use the gt target account for an example.
You can open the account with just N5000, and give the bank a standing instruction to debit from your normal savings account a certain sum amount of money.
And for a certain period, usually six months to one year.
So each month, the bank will deduct the said or agreed amount from your normal savings account, and credit it to your target account.
You’re not meant to touch or withdraw from the account, an by the end of agreed month, the bank will credit your target savings account with interest accrued.
You can choose to not to give the bank a standing instruction of debiting from your savings account, and to credit it to your target account.
Sometime it fails, the bank won’t deduct the said amount.
Or even make a mistake of debiting a high amount than you agreed with them.
That’s why i choose to do it by myself without leaving it to the bank to do it for me.
That is also why possible, transferring the agreed amount of money from your normal savings or salary account, to your target account.
All you need to do is immediately you receive your monthly payment, transfer the agreed amount to your target savings account.
Some banks will allow you to withdraw from the account within the agreed range, but you can’t have an interest.
While some won’t allow you to do that, and if you go ahead to withdraw money from the target account, attracts a penalty.
Target account is very similar to the normal savings account.
You’ll be issued a debit card and you can enroll for internet and mobile banking which includes the ussd code.
How to save money using target savings account
The purpose of this account is to save money for a project.
What type of project i’m talking about?
Any type of project that requires a huge amount of money.
Will you save money using the target account?
The answer is absolutely yes. But hey don’t collect a debit card.
You heard what i said clearly, don’t collect the debit card cause you might be tempted of using it to make payment or money withdrawal.
Then what’s the essence of wasting your time in creating a target savings account.
Honestly it won’t make sense it at all, i’m telling you that.
So don’t enroll for mobile banking, online or internet banking and the mobile ussd code.
Bank won’t prevent you from making withdrawal, but they will sanction you by not giving you any interest or even debit your money in the name of penalty.
A lot of people will be complaining, my savings account isn’t giving me any interest at all, i hate this bank.
No more complain, this one is for you to take.
This isn’t about fixed deposit, treasury bills or mutual funds, or investment account. It is a savings account with high interest rates.
NB the higher the money, the higher the interest rate bank will offer to you.
Usually it is from 2% to 5% depending on the bank.
The likes of United Bank for Africa (UBA) offers up to 4.30% interest rate on target savings account.
Gtbank do offer up to 5%, but since the turn of this year, the maximum is 4% for five million and above.
UBA Interest rate target account is as follows;
- N50,000-N99,999 = 4.05%
- N100,000-N999,999 = 4.10%
- N1million – N4,999,999 = 4.15%
- N5million and above = 4.30%
Access Bank Interest rate are;
- Less than ₦100,000 @ 2% p.a.
- ₦100,000 to ₦999,999 @ 4.5% p.a.
- ₦1,000,000 to ₦4,999,999 @ 5.0% p.a.
- ₦5 million and above @ 6.0% p.a.
Please Note that p.a means per annum or annually which is one year.
This means that access bank gives out interest if you leave the money deposited in your target account untouched.
Though they access bank said
You will enjoy 4 free withdrawals without forfeiture of credit interest payment on available balances maintained
GTBank gives you interest on your target savings account every six months if you didn’t touch your money in the name of withdrawal or payment.
Minimum Requirements
Some bank requires that you must have at least five thousand naira as a standing order in your target account.
Accces bank and gtbank requires you to have a minimum balance of N5000, while first bank and uba requires you to have N50k as your minimum standing order.
Before going ahead to open a target account with any bank, please request to know all their requirements and dos and don’t.
The requirements differs from bank to bank, like access bank requires a two satisfactory references.
But generally, these are the requirements;
- Duly Completed Account Opening Form
- Minimum amount of money
- 1 or 2 Recent Passport Photograph
- Government Issued ID (International Passport, Drivers Licence, Permanent Voters card, National ID Card/ NIMC Slip
- Valid proof of address of residency e.g. current Utility Bill not exceeding 3 months
How to open a target account
You can open your account online or offline.
But some banks will require that you visit their branch to open your account.
All you need to do is visit your preferred bank, and move to the customer service section.
Request that you want to open a target savings account or you can as well say high interest deposit account.
You’ll be issued a form to fill, complete everything and submit it back to the customer service representative along with the requirements.
You’ve to agree if the bank will be debiting your normal savings account and crediting it to your target account, or doing it by yourself.
This is called standing instructions.
Like i said don’t accept any debit card, don’t enroll for internet banking, mobile banking or ussd code.
Any transaction that occurred in your target savings account, you’ll receive a notification for it and which is once it a month.
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