How Nigerian banks make money from you without you knowing

Beyond the interest they earn on loans, they embed charges into services you use every day. Tiny deductions on your balance, hidden spreads on currency purchases and quiet penalties on inactive accounts can accumulate into significant costs over time. By recognising how banks extract value from routine transactions you can choose account types wisely, avoid unnecessary services and keep more of your earnings. Understanding these hidden revenue sources is the first step toward smarter banking and stronger personal finances. ALSO READ: 5 ways Nigerians are investing without touching traditional banks 1. Account maintenance charges Most banks deduct a monthly or quarterly service fee from savings and current accounts without sending a clear alert. These routine charges cover account upkeep and may range from two hundred to one thousand naira each cycle. Over the course of a year they can reduce your balance by thousands without delivering any tangible benefit in return. 2. Net yields that underperform headline rates Banks advertise competitive interest on deposits but pay out much less after withholding taxes and levies. On top of that they retain the difference between the gross rate promised and the net rate you receive. Meanwhile your funds are deployed into higher-yield corporate loans and government securities, allowing the bank to profit from the spread. 3. ATM withdrawal and balance-check fees When you withdraw cash beyond a small free threshold or check your balance at an ATM, the bank applies transaction fees that may go unnoticed. These fees typically range from a few hundred naira per use and escalate when you use machines belonging to other banks. Frequent ATM visits can erode your cash reserves faster than you realise. 4. Currency exchange margins Buying or selling foreign currencies through your bank often comes with a hidden markup over the prevailing market rate. That spread of two to five percent acts as pure profit for the bank. For large transfers or cash purchases this margin can amount to several tens of thousands of naira without any warning. RECOMMENDED: 5 Best ways for Nigerians to invest ₦1 million in 2025 5. Inactivity levies on dormant accounts If you leave an account untouched for several months the bank flags it as inactive and begins deducting dormancy fees. These levies continue until the entire balance is depleted or the account is formally closed. Reactivating an idle account or closing unused ones promptly is the only way to stop this silent drain. 6. Overdraft and unplanned credit penalties Spending more than your available balance triggers penalty fees plus daily interest charges on the negative amount. Overdraft fees may include a flat charge of several hundred naira each time the account goes into the red and a high annual interest rate calculated on the shortfall. Even a small unplanned debit can become costly if left unchecked. 7. Notification and data-usage costs Banks send SMS or email alerts for each debit and credit posted to your account and often charge per notification. With rates of ten to twenty naira for each message, dozens of alerts each month can add up to a substantial fee. Switching to in-app push notifications or requesting consolidated statements helps you stay informed without extra cost. By recognising these hidden fee structures and spreads you can switch to transparent account plans, avoid unnecessary services and negotiate better terms, ensuring that your money works for you rather than padding bank profits at your expense. EXPLORE: Best-paying banks for entry-level staff and their estimated salaries