ONLINE savings accounts are accounts offered by financial technology companies (FinTechs). Compare to savings accounts offered by deposit money banks, online savings accounts require less documentation and offer fast account opening processes.
Some of the FinTechs offering online savings accounts are Piggybank, Cowrywise, ALAT, Payvest, KoloPay, PayDay and Esusu online.
Features of online savings platforms
Irrespective of the FinTech offering the account, most of them have several common features. The major features are outlined below.
Online savings platforms allow you to save daily, weekly or monthly starting with N50 and above. You can start your saving plans with as low as N100 (One hundred Naira) on Cowrywise platform.
Withdrawal penalties: Some online savings platforms like ALAT and Kolo pay has withdrawal penalties. For ALAT, you receive interest of 4.2 percent when you do not withdraw more than 3 times a month while for KoloPay you pay 5 percent charge if withdrawal is done before the agreed date.
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Most of these online savings platform, like Piggybank, has N3000 minimum daily withdrawal limit and no maximum. You can also withdraw all your money at a go on the set date for collection while some like ALAT allows withdrawal of 50 percent of savings once in every 30 days. For PayDay, you have a minimum withdrawal limit of ¦ 1,000 daily.
Some platforms do not have transfer limits because you can only transfer your saved money on the due date to your bank account in another bank while some like Esusu online has a daily transfer limit of N20, 000.00 and N50, 000.00 with full Know Your Customer detail.
You can save towards a common goal with friends, family, and co-workers in some of the platforms and everyone in the group also gets interests paid to them daily. The Esusu online platform has such a feature.
Some online savings platform issues debit cards while some don't. For instance, Piggybank and Cowrywise do not issue debit cards while ALAT issues debit card.
Online savings platforms have target savings ranging from N50 to N50,000 daily, N800 to N200,000 weekly and N3000 to N3 million monthly. For example, the minimum amount that can be saved on PayVest is ¦ 50,000 and the investment tenures are currently in 3, 6, 9 or 12 months.
Some online savings platform charges for services rendered. Examples are ALAT which collects N65 fees when you use your debit card to make a withdrawal from another bank's ATM after the first three times a month and KOLOPAY which accepts 5 percent charge if withdrawal is done before the set date. Others like Payvest, Cowrywise, and Piggybank do not collect withdrawal charges.
Advantages of online savings accounts
Online savings accounts have several benefits. These include:
Easy access: For example you can access your account online or with your mobile device anytime, anywhere. This allows you the convenience of being able to deposit money and view your balance and account activity on-the-go.
Higher interest rates: Most online savings platform offer higher interest rates because their overhead costs is lower than that of traditional banks and they also charge little of no fees. For instance, Piggybank gives 0.8 percent monthly and 10 percent per annum on savings. While Cowryrise pays interest of 10 to 15 percent interest per annum.
Cheque deposits: Some online platforms allow you to pay in cheques into your online savings account. An example is ALAT by Wema Bank.
Fixed deposit: Some online savings platforms have features which allow you save some amount of money aside for a fixed period without having access to it till the agreed date for collection is up. For instance, Piggybank's savings plan called safelock.
Disadvantages of online savings accounts
Cash deposit: It is difficult to deposit cash into your online savings account but you can perform such by using an Automated Teller Machine (ATM) that accepts cash deposits. You cannot walk up to a bank to make a deposit.
No human interaction: There is no physical human interaction. In a situation when you want to ask questions or get help with your account, you can only contact the customer care service center online.
Withdrawal delays: It typically takes three to five days to move money from your online savings account to another institution using standard transfer services.
Limited offerings: Online savings platforms offer limited products. Some offer cheque accounts or savings accounts, but not both. Some also offer loans while others don't.