Fixed deposit in Nigeria: Interest rates, investment & more

A fixed deposit is an ideal way to earn passive income on your money instead of keeping it idle in a savings account. In fact, many people make a business out of investing huge amounts for as long as one year, to reap a larger share of interests at maturity.

This is not a scam or fraud. It is simply a way of getting your money to make more money for you, while you do nothing.

So if you’re wondering how to invest in fixed deposits in Nigeria or which bank has the highest interest rates, this article contains all you need to know. 

What is a fixed deposit?

A fixed deposit is a large sum of money that is kept with a bank under an agreement of interest accumulation, for a specific period of time and a pre-agreed interest rate.

How long does a fixed deposit last?

The duration of a fixed deposit varies from bank to bank. While some banks allow short-term tenors as one month, for others it can be extended for up to five years.

It all depends on the contract agreement. One important difference between FD and a savings account is that accumulated interests are not released until the end of the investment period in an FD. Whereas, interests are paid regularly for a savings account.

Why should I invest in fixed deposit?

There are numerous advantages in a fixed deposit investment, some of which are:

• Guaranteed returns on investment: Pre-agreed interests will be accumulated throughout the tenor and is paid at once. Payments are made at the end of a fixed deposit contract.
• Investment is flexible: You can decide how long you want to keep an investment, how much to invest and which bank to invest in.
• Liquidity: Money invested in a fixed deposit can be easily converted into short-term assets at the discretion of the investor. However, doing this usually results in forfeiture of interest not yet earned.
• Attracts higher interest rates compared to a normal savings account.
• Locking money in fixed deposit account helps to prevent unnecessary spending.
• You can choose to spread your investment across fixed deposit accounts with different banks, and enjoy all the accruing interests when due.
• Little or no risks as against investment in the stock market.

Requirements to open a fixed deposit in Nigeria

The core requirement for investing in fixed deposits in Nigeria is a valid account with any deposit money bank of your choice. Next, fund the account with the amount you want to fix and go to the bank to complete the necessary documentation. There are basic requirements for opening an account with a commercial bank such as:

• A valid, government-issued means of identification (could be either national identity card, passport, voters card, or driver’s license).
• Proof of residence (could be utility bills like electricity bill, water bill, rent receipt)
• Two passport photographs of the applicant.
• A fully-filled form applying for a fixed deposit contract which will be issued by the bank.

Fixed deposit interest rates of banks in Nigeria

Fixed deposit interest rates of banks in Nigeria differ from bank to bank. According to the CBN transparency guidelines, all deposit money banks are mandated to publish their fixed deposit and lending rates to the general public. This is to guide and also inform business decisions. Usually, these rates are published on a weekly basis on the CBN website and in newspapers across the country. Below are the fixed deposit interest rates of DMBs in Nigeria.

S/N	Name of bank	Demand deposit (Avg. Interest rate)	Savings deposit (Avg. Interest rate)	Time deposit (Avg. Interest rate)
1	Access bank	0.34	1.15	2.34
2	Citi bank	0.10	1.20	0.70
3	Coronation merchant bank	_	_	4.58
4	Ecobank	0.01	1.25	2.69
5	FCMB	0.27	1.15	0.25
6	Fidelity bank	0.50	1.15	2.00
7	First bank Nigeria ltd.	0.00	0.00	1.50
8	FBN merchant	_	_	2.34
9	FSDH	_	_	2.00
10	Guarantee trust bank	0.16	1.15	1.17
11	Globus bank ltd.	0.01	1.15	4.00
12	Heritage bank	0.00	4.20	13.88
13	Keystone bank ltd.	0.60	1.15	5.61
14	Nova merchant bank	_	_	4.27
15	Providus bank	0.86	0.62	3.73
16	Rand merchant bank Nig. Ltd.	0.00	0.00	2.89
17	Polaris bank	_	1.15	1.99
18	Stanbic IBTC bank	0.001	1.15	1.60
19	Standard chartered Bank	0.00	1.20	0.03
20	Sterling bank	0.00	1.15	7.53
21	Suntrust	0.00	4.10	3.72
22	Titan trust bank	0.00	1.15	1.66
23	Union bank	0.11	0.15	1.00
24	United Bank of Africa	0.03	1.15	1.00
25	Unity bank	0.45	1.90	4.00
26	Wema bank	0.84	1.15	1.70
27	Zenith Bank	0.04	1.15	0.99

Fixed deposit accounts of top commercial banks in Nigeria

Listed here are both the benefits and features of opening a fixed deposit account in top deposit money banks in Nigeria:

1. First Bank of Nigeria

According to First bank’s website, this account lets investors grow their money by investing a specific amount of money for a fixed period of time (called tenor), at an agreed interest rate. 

A Fixed deposit tenor varies between 30 and 360 days. At the end of which the investment can be rolled over or liquidated, inclusive of interest earned, depending on the customer. Also, an investment can be terminated before its maturity, but that means forfeiture of part of accrued interest.

2. United Bank of Africa

Guaranteed capital and return on capital, within 30 days and 180 days maturity. 

• Features secured, risk-free, fixed deposit investment for either short, medium, or long-term tenures.
• Flexible interest rate and tenure.
• Interest and principal can be reinvested after the expiration of agreed tenure.
• No tax on interest received.

3. Zenith Bank PLC

Zenith bank offers diverse packages for customers interested in investing in fixed deposit in Nigeria. The bank’s investment packages include fixed deposit, call deposit, zenith premium funds(ZPF), and Zenith Premium Funds plus(ZPF+). Each of these offers its own features and benefits but our focus now is on fixed deposits. 

The tenor for FD is between 30-90 days, a minimum deposit of N100,000, and a 10% withholding tax is levied on accrued interest upon maturity. However, liquidation before maturity attracts a penalty charge of 20% of accrued interest or N2000(whichever one is higher).

4. Guaranty Trust Bank Plc

GTbank offers a fixed deposit account for minimum of 30 days and maximum of 180 days. Customers can choose to terminate investment at maturity or rollover to another tenure. Investing the GTbank’s FDA also grants free access to all the bank’s electronic channels.

5. Wema Bank PLC

Wema bank fixed deposit account features are similar to those offered by other top Nigerian banks. They offer high-interest rates on investment, flexible time periods, rollover options, and many more.

One distinctive benefit is free access to all their electronic banking channels while growing your investment.

6. Stanbic IBTC Bank

Stanbic offers an FDA with a minimum of 30 days and 1 year max investment period. The minimum opening deposit is N100,000, $5000, or equivalent in other currencies.

The plan is flexible and offers competitive interest rates. A distinctive benefit is that the account supports other currencies such as GBP, EUR, USD, and ZAR. The customer can choose to automate the rollover feature at the end of the FD period.

Note that, the FDA attracts at least 10% withholding tax on interest rate.

How to open a fixed deposit account:

• Have an existing personal or business account with the bank
• Deposit at least the minimum amount to be fixed, into the account.
• Fill a deposit mandate form 
• Submit the deposit mandate form.

Final words

There you have all you need to know about fixed deposits in Nigeria. You can compare the rates and offers from each bank and select the one you like best. You can as well choose to spread your investment among a variety of banks.