If you are interested in activating that interest-generating instrument, then the fixed deposit accounts may be your surest bet.
Nigeria is known to have a robust banking sector that has evolved over the years. There are various commercial and investment banks in the country, ranging from small to large corporations.
These banks provide various financial services such as savings and current accounts, loans, mortgages, and investments.
What is a Fixed Deposit Account?
A fixed deposit account is a type of investment account offered by banks.
It is a savings account that allows you to invest a lump sum of money for a specific period, usually ranging from 30 days to 365 days.
The interest rate on a fixed deposit account is fixed and higher than that of a savings account.
Fixed deposit accounts are suitable for individuals who want to save money for a specific purpose or those who want to earn higher interest rates than savings accounts.
The interest rate on a fixed deposit account is determined by the amount invested, the duration of the deposit, and the bank's policies.
Benefits of Fixed Deposit Accounts
Fixed deposit accounts come with several benefits. They are known to offer higher interest rates than savings accounts.
The interest rate is fixed, which means you can predict your returns accurately.
Also, fixed deposit accounts are safe and secure, as they are insured by the Nigerian Deposit Insurance Corporation (NDIC).
Furthermore, they provide an excellent opportunity to save money for a specific purpose, such as education, business, or retirement.
Fixed deposit accounts also encourage disciplined saving, as the money invested cannot be withdrawn until the maturity date.
How Fixed Deposit Rates Work in Nigerian Banks
The interest rate on fixed deposit accounts in Nigerian banks is determined by various factors, such as the amount invested, the duration of the deposit, and the prevailing economic conditions.
Banks in Nigeria also offer different interest rates on fixed deposit accounts, depending on their policies and market conditions.
The interest rate on a fixed deposit account is usually higher than that of a regular savings account.
Still, it varies among banks, and it is essential to compare rates before investing.
Nigerian banks also offer different types of fixed deposit accounts, such as short-term and long-term fixed deposit accounts, each with varying interest rates.
Fixed Deposit Rates Among Nigerian Banks
The interest rates on fixed deposit accounts in Nigerian banks vary significantly. Here is a list of the top Nigerian banks and their fixed deposit rates for 2023.
1. Guaranty Trust Bank
GTB has a Fixed/Tenured Deposit account which is a tenured investment account with a specific amount invested at an agreed interest rate and tenure.
At the end of the agreed period (tenure), and based on the account holder’s instructions, the investment can either be re-invested or returned with the interest amount earned.
The tenure is usually 30 days minimum, or 180 days maximum.
This account offers a 4.95% interest rate per annum and an additional 1% bonus interest to customers who maintain a Standing Order deposit for 1 year.
2. Access Bank
Access Bank’s High-Interest Deposit Account is an investment account made at a fixed interest rate and fixed maturity date.
The investment can be used as collateral for a loan while the interest on deposits is guaranteed.
Interests on this account range from 5.25% p.a. to 5.45% p.a.
The maximum amount held in the account is N50 million.
3. Union Bank of Nigeria
As with all its financial products, Union Bank’s fixed deposits, whether short, medium or long-term, offers a high degree of investment certainty to its customers.
The termed deposits can either be re-invested or paid to the customer with the earned interest at the agreed amount of time.
With a minimum tenor of 30 days and a minimum deposit of ₦100,000, interests on this account range from 4.2% to 4.5%.
4. Stanbic IBTC
Stanbic IBTC’s Fixed Deposit Account is perfect for those who have a lump sum of money to invest and desire amazing returns.
The Fixed Deposit Account can earn depositors more interest on their money from a period as short as 30 days to up to a full year.
With competitive interest rates, depositors can receive either interest only or interest plus principal at the expiration of the term.
The interest rate subject to withholding tax is currently at 10%
5. Fidelity Bank
Fidelity Bank’s fixed deposit accounts offer investment options in various currencies; Naira, Dollars, Euros and Pounds.
It offers interest rates as high as 6% for Naira investments, and 5% for other currencies depending on the principal invested.
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6. Sterling Bank
Fixed Deposit, a product by Sterling Bank is an investment account designed for individuals and businesses that wants to enjoy a financial instrument that pays a fixed rate of interest for a given period.
It comes with a minimum tenor of 30 days, negotiable and competitive rates and interest is paid at full maturity.
Investment is also renewable on maturity with an interest rate of 2% – 5% p.a.
7. First Bank of Nigeria
First Bank grows your money with its Fixed Deposit account which lets you invest a specific amount of money for a fixed period of time at an agreed interest rate.
At the end of the agreed period, the investment can either be rolled over or liquidated with the interest amount earned.
Individuals and Corporate organisations can operate this account.
8. United Bank for Africa
United Bank for Africa’s Fixed Deposit Account is designed for corporate organisations to maximise returns and earnings on their funds for a specific period.
Its interest rate and tenure are subject to the customer’s preference. Interest with the principal can be re-invested immediately after the end of the agreed tenure.
Interest received is not subject to tax and ranges between 3.8 % to 4%.
9. Ecobank Nigeria
Fixed Income Fund, a product of Ecobank, aims to optimise predictable, long-term investments in Africa’s economic growth so that you can invest more confidently.
The fund also allows holders to subscribe to units on behalf of children under the age of 18, who can either take over the investment or cash out after their 18th birthday.
10. Polaris Bank
Polaris Wise is a 3-in-1 high-yield savings account that combines the features of a savings, current and fixed deposit account. It encourages depositors to save more to earn more.
It has a minimum opening and operating balance of N10,000.
Interest forfeiture applies on balances below N100,000 or if the withdrawal limit exceeds the maximum of three times monthly.
Factors to Consider When Choosing a Bank for Fixed Deposit
When choosing a bank to invest in a fixed deposit account, several factors should be considered.
1. Interest rate offered by the bank
2. The bank's reputation and stability
3. Customer service
4. Accessibility
It is also essential to consider the terms and conditions of the fixed deposit account, such as the minimum deposit amount, the tenure, and the penalties for early withdrawal. Visit nairaCompare to compare fixed deposit accounts and select one that’s best suits your financial goals.
These factors will determine the returns on the investment and the overall investment experience.
Once you have provided the necessary details, the bank will process your application and open the account for you.
You will also receive a certificate of deposit, which will contain the account details, such as the interest rate, the tenure, and the maturity date.
Investing in fixed deposit accounts is an excellent way to save money and earn higher interest rates than savings accounts. Nigerian banks offer varying rates on fixed deposit accounts, and it is important to compare rates before investing.
Visit nairaCompare to see a comprehensive list of fixed deposit rates of Banks in Nigeria and select the one that’s best for you!
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