Highest-yield interest rates on Nigerian digital banks

For most Nigerians, saving money means depositing money into the local bank, locking it away, and hoping it doesn’t get lost. Physical banks typically offer very low interest rates. Savings accounts earn less than 2% annually, and when you take into account taxes and fees, the returns are negligible.  

In the past few years, many tech-savvy, mobile-first financial technology platforms have emerged in Nigeria. These digital banks, also known as neobanks, offer a faster, more flexible, and more rewarding way to manage money, complemented by a tech-supported approach. They have little to no physical presence for customers nationwide. The most tempting aspects of these digital banks are their high-yield interest rates, especially relating to savings and investment accounts.

If you are fed up with your money sitting idle in banks, then keep reading. In this article, I will outline the highest-yield interest rates on Nigerian digital banks, so your money can start working for you. 

Understanding interest rates in digital banking

It is most important to understand the kinds of interest rates being offered and what makes them “high-yield” before diving into the platforms themselves.

Across the average traditional banks in Nigeria, the average savings interest ranges from 1.25% to 1.5% per annum. When compared against an inflation rate that is typically in double digits, it is determined that your money loses value in real terms.

Digital banks put their interest rates within a range of 8% to 15% on a per annum basis, and sometimes even over that for fixed-term savings. The reason most of them can afford better yields is that they spend less on overheads (no branches, smaller teams), and many of them invest user deposits into secure financial instruments, with some of the profits passed on.

Nigerian digital banks with the highest-yield interest rates

Below are the digital banks offering the highest interest on savings.

1. PiggyVest: Up to 13% per annum

PiggyVest is arguably the most popular savings and investment platform in Nigeria. It was started as a savings-only platform in 2016, but has evolved into a full financial management tool.

PiggyVest has different savings plans; these include Piggybank (auto saving), Flex Naira (flexible saving), Safelock (fixed lock savings), and Target Savings. The interest rate differs in line with the plan you pick.

• Piggybank: Piggybank gives you 10% annually, calculated daily but paid monthly.
• Flex Naira: Flex Naira offers up to 12% per annum, and it is much more flexible than other plans. You can save as much as you like, and withdraw whenever you want. 
• Safelock: Safelock gives you the option to lock funds for a fixed period with an interest rate of up to 13% annually, depending on how long you are willing to keep the money put away.
• Target Savings: This plan allows you to set a target and save towards your goal, while earning as much as 12% on interest.

Transparency is also one of the great selling points of PiggyVest. You can also see your interest accruing daily, and the app sends you savings tips and a breakdown of what you are spending.

2. Cowrywise: Up to 15% per annum 

Cowrywise is another major player in the Nigerian digital banking and investment space. It focuses more on building wealth through savings and mutual fund investments.

Savings plans include:

• Regular savings: Up to ten percent per annum, with the time and frequency of savings determining the extent.
• Fixed plans: This form allows for locking away funds and can gain up to 15% per annum, but usually in partnership with investment firms. 

Unique to Cowrywise is that it creates access to mutual funds managed by licensed asset managers, such as ARM, Meristem, and United Capital. Returns on these are not fixed but may be superior to those earned on fixed-interest savings if market conditions are favorable. 

3. Kuda Bank: 15% with Spend+Save 

Kuda describes itself as “the bank of the free” and is a full digital microfinance bank that has been licensed by the CBN.

Unlike the two of the traditional high-yield savings accounts, PiggyVest and Cowrywise, Kuda does not offer such a feature; however, through its Spend+Save feature, one can save a percentage of the spending.

This is what happens; each time you pay bills, purchase airtime, or transfer money using your Kuda account, a small portion of the money spent is saved automatically (1%-15%).

These micro-savings can earn up to 15% in a year, more in cases where the feature on fixed savings is activated; this would last for about 90 days or even more.

4. VBank: Up to 14% Per Annum on V Targets 

V is a digital bank patronized under VFD Microfinance Bank, offering full banking services, from transfers to bill payments, but equally, it has a suite of savings tools. 

V Targets is most notable in that you can save toward a personal goal, whether school fees, rent, or even a gadget. Depending on the period you save, the interest can climb as high as 14% per annum. 

5. Sofri Bank: Up to 13% Fixed Savings 

Sofri is a newer digital bank whose operation is supported by Links Microfinance Bank. It is not as well-known as PiggyVest or Kuda, but it is competitive in its interest rates. 

They have up to 13% per annum on their fixed savings, with flexible tenure and automatic renewals. 

Sofri also has a virtual debit card, spending analytics, and some cashback offered when using the app actively. 

How safe are these digital banks?

These banks do not have a physical location, so you might be wondering whether your money will be safe with them. You can rest assured, as all the banks mentioned above are registered microfinance banks licensed by CBN or operate in partnership with CBN-licensed financial institutions like asset managers and MFBs. 

For instance: 

• PiggyVest manages its funds through AIICO Capital, a licensed asset management firm.
• Cowrywise is registered as a fund manager with the SEC.
• Both Kuda Bank and VBank are licensed microfinance banks under the CBN.

Most of them are also NDIC insured, meaning your deposits are protected up to a certain limit.

Even so, read the terms, check for licensing, and don’t put all your eggs in one basket; diversification is key if you want to grow your money and remain safe. 

Conclusion

The Nigerian digital banking space is quickly evolving, and these platforms provide Nigerians with better options, better rates, and more say over their money. As the economy of Nigeria progresses, these digital banks with high-yielding interest rates are proving that you can grow your money without risk. Your money should work for you; these digital platforms are making sure of that.