A domiciliary account will come in handy when you need to earn income in foreign currency or send money abroad.
This account allows you to send and receive money from friends abroad, pay for transactions and meet other financial obligations such as school fees, seminars and holidays.
A domiciliary account is a platform that allows you to open an account in a Nigerian bank, which is denominated in currencies different from naira and can be maintained in any of your bank branches locally or abroad.
You can deposit funds in the account through cash, traveller’s cheques or foreign currency cheque deposits.
The account holder can also deposit and withdraw money as many times as he wants in a month.
You can transfer funds from the domiciliary account to your current account and vice visa at the market exchange rate except in cases of restrictions by regulatory policies.
It can attract some charges while operating because your bank would want to demand some liltte percentages for making foreign transfers.
To open it, you must have an active current bank account with the bank.
Your bank will require two referees who are current account holders.
You have to fill a domiciliary account opening form, produce documents such as passports, a means of identification and a utility bill.
Your bank may also stipulate the minimum deposit you may need to have to open the account.
Some of the benefits include accessibility to your money from any of your bank’s branches locally and abroad; you can withdraw cash from your account anywhere in the world; you can transfer money overseas and do business transactions internationally.
Also, when you maintain a certain level of balance, the bank may pay you some interest on your deposit.
Another advantage is that you do not have to keep your foreign currencies in cash or at home. A domiciliary account keeps your money safe in the bank.
An account holder should ask three specific questions before opening a domiciliary account.
- What is the account minimum? Financial institutions that offer foreign currency accounts may have a higher minimum on the account than a regular account. While the minimum opening balance is usually low, you need to have some substantial amount to start earning interest.
- What are the currency conversion charges? You will probably be paying a currency conversion fee for buying one currency and then converting it back into naira, which can quickly eat up the principal if you have a lot of currency holdings.
- How much can foreign currency risks sink your return? Currencies can be highly volatile; you can lose the principal when your deposit is switched back into naira. There is so much risk in currency. For example, a currency can move from one per cent to three per cent in one day. However, a foreign currency account is a good tool for getting higher yields and appreciation once you know the risks.
