What is tier 3 account

Banking

What is tier 3 account: Beginner’s guide to tier 1, tier 2 and 3 accounts in Nigeria

What is tier 3 account – Richard opened a bank account with a leading commercial bank in Nigeria, though noted neither his ID card nor utility bill was required from him at the time the account was opened.

On this occasion he could not withdraw from his account having received a deposit of N200k in one fold. He pleaded endlessly with the teller who declined and cited account type, thus advised him to go for a possible account upgrade since the account is now restricted.

Richard could not understand why he couldn’t access his funds despite all explanations, to think that he has a financial task to undertake makes it even embarrassing.

What you should understand

The problem with Mr. Richard is that he operates either a tier 1 or tier 2 account. In this light he received an amount higher than the allowed limit of his account in one single deposit or above threshold.

In this guide, I will show you how to avoid possible pitfalls like Mr. Richard alongside answer the following questions as well as avoid the Mr. Richard’s scenario.

  • What is tier 1 account
  • What is a tier 2 account
  • What is tier 3 account
  • Tier 3 savings account limit
  • Tier three account in Nigeria
  • Difference between tier 1, 2 and 3 accounts, etc.

What is tier 1 account?

In banking generally accounts are classified according to their opening documentation requirements. To open a savings account in Nigeria you are required to provide the following documents

  • Valid ID card which could be any of (National ID, voters card, driver’s License or International passport).
  • A utility bill not later than 90 days or three months
  • A copy of passport photograph, etc. to mention just a few.

A tier a 1 account is an account that has the least account opening requirements. This type of account can be opened from anywhere, even while walking on the road.

Most times tier 1 accounts are opened with just your passport photograph and signature mandate, however, their thresholds are usually somewhere around N100k with a single deposit not exceeding N50k.

Single deposit means the highest amount that must not be deposited at once. If you are looking to credit your account with N50k, you are advised to split the deposit into two tellers or transfers of say N30k and N20k.

The upsides about tier 1 account

  • Account does not require too many documents
  • It can be opened from any sport, even uninformed in most cases
  • Usually opened with a phone
  • You can receive money in your account

Downsides about tier 1 account

  • Deposits are done in tranches most times
  • The threshold is usually low (This refers to the maximum amount you can receive)
  • When funds are not deposited in tranches as well as threshold exceeded, the account automatically goes restricted (Most likely the issue Mr. Richard had with his account in the illustration above).

What is tier 2 account?

A tier 2 account is similar to a tier one account in the sense that the account opening documentations are usually few.

A tier 2 account may be opened with just a passport photograph and an ID card in any of the categories as mentioned above.

With this regard, the single deposit limit for a tier 2 account is higher than that of tier 1 account as well as the account threshold.

The single deposit limit on this account most times starts from N70k – N100k. Where the account deposit limit is about N300k-N400k, this however, depends on the bank’s risk appetite and capital assessment.

Upsides about tier 2 account

  • It requires minimal opening documentation
  • Account opening is fast
  • Usually opened with a mobile phone
  • Funds can be transferred as soon as the account is ready

Downsides to tier 2 account

  • Deposits are done in tranches in view of certain amounts
  • The threshold is usually around N400k, however, must be deposited in tranches of N70k – N100k most times. Otherwise you risk account being restricted.
  • Deposit is limited till an upgrade is done.

What is tier 3 account

Now to the big one, the tier 3 savings account is the highest form of savings account you can get in any Nigerian bank.

It’s a savings account that allows you to deposit any amount anytime of the day, it does not go with a deposit limit, no deposit in tranches. Just pay in any amount any how you want it.

The uphill task with this account is that every requisite document must be made available before the account can be opened and operated.

These documents include but not limited to,

  • Valid ID card
  • A utility bill not later than 90 days or three months
  • A copy of your passport photograph
  • Premise verification report is done on the customer
  • KYC, etc.

Upsides to a tier 3 account

  • You can fund your account with any amount
  • It gives you access to ATM card and other e-channel transactions
  • It offers this flexibility you need in an ideal savings account even if you want to run a small business with.
  • There’s do daily deposit limit, activities are carried full-fledge

Downsides to tier 3 account

  • All requisite documents must be met before you can operate this account, in this case it becomes a barrier to financial inclusion for prospective customers who do not have complete documents for a tier 3 account.

Why accounts appear in tiers

From the above, you would understand that different customers have different lifestyles, there’s no one size fits all scenario.

Some customers may not have a valid ID card while others may as well as the utility bill.

The Central bank of Nigeria in its wisdom, in a view to promote and equalize financial inclusion device a means to carry everyone along irrespective of your ability to meet or not meet documentation requirements.

Difference between tier 1, 2 and tier 3 savings account

Tier 1Tier 2Tier 3
Tier one account is the least of savings account types in NigeriaTier two account is at mid-range of savings account type in NigeriaTier 3 account is the highest class of savings account in Nigeria
May require just a passport photograph as opening documentMay require a combination of Valid ID in any category like company ID etc, and a utility bill. Kindly note that a combination is not compulsory though as deem fit by the operating bankThe tier 3 account requires that you provide all necessary account opening documents for a standard savings account in Nigeria.
Minimum single deposit limit apply as well as account thresholdMinimum single deposit limit apply as well as thresholdThere’s no minimum single deposit limit, there’s no threshold to how much the account can accommodate.

The process of account upgrade

Account upgrade usually happens when you want to convert your tier 1 or two account to a standard savings account/tier 3 account.

How to upgrade your account

To upgrade your account you will have to provide the following

  • A valid ID card
  • A valid utility bill not later than 90 days or three months
  • A clear copy of your passport photograph, etc.

Having acquired the above listed documents, kindly visit the bank’s nearest branch to your location and enquire to upgrade your account.

You will be issued a customer account upgrade form similar to the customer information update form.

Complete the form duly, hand in your documents, having verified and confirmed that your documents are good to go your account would be upgraded within 24 hours thereafter you can start consummating transactions without further hitches.

Conclusion

Now you can answer the question “What is tier 3 account, tier 2 and 1 respectively. Their differences lies in their thresholds and availability of deposit limits in the smaller two.

Are there issues, questions or concerns you’d wish addressed, let’s get talking at the comment section.

2 comments on “What is tier 3 account: Beginner’s guide to tier 1, tier 2 and 3 accounts in Nigeria

[…] For a better understanding, read my guide on tier 1, tier 2 and tier 3 accounts in Nigeria. […]

[…] can have a tier 1 account. In this case, the bank marketers may just write down the address of the place they met the […]

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