A Call Account or Call Deposit is a flexible instrument that allows you save and earn interest while having access to your funds should you be in urgent need of cash.
It is an investment outlet for cash that you do not have an immediate need for but also do not want to tie up in a fixed deposit. Therefore, rather than allow it to remain idle in a non interest bearing account you can transfer it to a call account.
The advantage of a Call therefore is that you can have access to your cash at a very short notice typically one to two days maximum. Due to the flexible nature of a Call Account, interest rates on it is typically low and well below that of a Fixed Deposit and sometimes a Savings Deposit. Call Rates in Nigeria can range from between 2-5%pa depending on the bank and the amount invested.
Idle funds can be placed on overnight call, 7-day call or 14-day call. This means you can place your money in a call account for 7days, 14 days or overnight.
Is it for me
Call deposits are for people who have cash that they wish to put to use anytime soon. It is not for anyone who is looking to invest for the long term and looking for decent returns. By their very nature, Call Deposit earn very low interests and is more suitable for businesses or individuals who are into trading but have high cash turnovers in their bank account. Since they do not always use all the cash in their balance sheet, a call deposit gives them an option to earn money from whatever idle cash they have left in their bank accounts at any time.
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This article originally appeared on Nairametrics on September 7, 2013 and has been updated.