When it comes to safe and secure investments in Nigeria, two of the most popular options are Fixed Deposits and Treasury Bills (T-Bills). Both offer a low-risk way to grow your money, but they differ in returns, flexibility, taxation, and accessibility.
So, which one should you choose?
In this guide, you’ll learn:
✅ The key differences between Fixed Deposits and Treasury Bills
✅ Which one offers better returns
✅ How they are taxed in Nigeria
✅ Which is best for short-term or long-term investors
💡 Want to calculate your Treasury Bills earnings before investing? Use our free Treasury Bills Calculator to estimate your returns instantly!
What Is a Fixed Deposit?
A Fixed Deposit (FD) is a time deposit account where you lock your money in a bank for a fixed period (30 days, 60 days, 90 days, 6 months, 1 year, etc.) at a fixed interest rate.
✔ Guaranteed Returns – Your interest rate is locked in at the time of investment.
✔ Safe Investment – Your money is held in a commercial bank with low risk.
✔ Flexibility – You can choose from different deposit tenors (30 days to 1 year).
✔ Higher Interest Than Savings Accounts – Fixed Deposits pay more interest than a regular savings account.
💡 However, the interest rate is lower than Treasury Bills in most cases.
What Is a Treasury Bill?
A Treasury Bill (T-Bill) is a short-term debt instrument issued by the Central Bank of Nigeria (CBN) on behalf of the Federal Government.
✔ Risk-Free Investment – Backed by the government, so zero risk of default.
✔ Tax-Free Returns – Unlike Fixed Deposits, T-Bill earnings are not taxed.
✔ Higher Interest Rates – T-Bills often offer higher returns than Fixed Deposits.
✔ Short-Term Investment – Available in 91-day, 182-day, and 364-day tenors.
📌 The biggest advantage of Treasury Bills over Fixed Deposits is that their interest rates are usually higher and are not subject to tax.
Fixed Deposit vs. Treasury Bills – Key Differences
| Feature | Fixed Deposit | Treasury Bills |
|---|---|---|
| Issuer | Commercial banks | Central Bank of Nigeria (CBN) |
| Risk Level | Low risk (but depends on the bank) | Zero risk (Government-backed) |
| Interest Rates | Lower (5% – 15%) | Higher (10% – 30%) |
| Tax on Interest? | Yes, 10% withholding tax | No tax on earnings |
| Maturity Period | 30 days to 1 year | 91, 182, or 364 days |
| Interest Payment | Paid at maturity or monthly | Paid upfront (discounted) |
| Liquidity | Can be withdrawn early (but with penalty) | Can be sold in secondary market |
| Minimum Investment | ₦100,000 – ₦500,000 (varies by bank) | ₦50 million (Primary Market), ₦1,000+ (Secondary Market) |
| Who Can Invest? | Individuals & businesses | Individuals, banks, and institutions |
📌 Want to estimate how much you can earn from Treasury Bills? Use our Treasury Bills Calculator today!
1️⃣ Returns – Which Pays More?
✔ Treasury Bills generally offer higher returns than Fixed Deposits.
✔ Fixed Deposit rates in Nigeria typically range from 5% – 15% per annum.
✔ Treasury Bills rates currently range between 10% – 30% per annum.
📌 Example:
- Fixed Deposit: Invest ₦1,000,000 for 1 year at 10% interest.
- You earn ₦100,000, but after 10% tax, your final profit is ₦90,000.
- Treasury Bill: Invest ₦1,000,000 in a 364-day T-Bill at 30%.
- You pay ₦770,000 upfront and receive ₦1,000,000 at maturity, earning ₦230,000.
- No tax is deducted!
💡 Want to compare returns instantly? Use our Treasury Bills Calculator to estimate your earnings.
2️⃣ Taxation – Which One Is More Profitable?
✔ Fixed Deposits are subject to a 10% withholding tax on interest earned.
✔ Treasury Bills are completely tax-free if held until maturity.
📌 This means that even if a Fixed Deposit and a Treasury Bill have the same interest rate, the T-Bill will still be more profitable because no tax is deducted.
3️⃣ Liquidity – Which One Is Easier to Access?
✔ Fixed Deposits can be withdrawn before maturity, but you may lose some or all of your interest as a penalty.
✔ Treasury Bills can be sold before maturity in the secondary market, but this depends on demand.
📌 If you think you may need your money before maturity, Fixed Deposits may be a better option because banks allow early withdrawals (with a penalty), whereas selling T-Bills may not always be immediate.
4️⃣ Minimum Investment – Which One Is More Accessible?
✔ Fixed Deposits require a minimum deposit of ₦100,000 – ₦500,000, depending on the bank.
✔ Treasury Bills require a minimum of ₦50 million in the primary market, but you can buy as low as ₦1,000 in the secondary market.
📌 If you don’t have ₦50 million, you can still invest in T-Bills through the secondary market via banks and brokers.
💡 Want to check how much you’ll earn? Use our Treasury Bills Calculator to estimate your profit!
Which One Should You Choose?
✔ Choose Fixed Deposits If You Want:
✅ Guaranteed, steady income (paid monthly or at maturity)
✅ Easier liquidity (early withdrawal option available)
✅ Smaller investment amounts (₦100,000 – ₦500,000)
✔ Choose Treasury Bills If You Want:
✅ Higher returns (10% – 30% per annum)
✅ Zero tax on earnings
✅ A completely risk-free government-backed investment
📌 Want to calculate your Treasury Bill returns before investing? Use our Treasury Bills Calculator now!
Final Thoughts – Which Investment Is Best for You?
✅ Fixed Deposits are good for people who want predictable interest payments and easy access to funds.
✅ Treasury Bills are better for those looking for higher, tax-free returns with government-backed security.
💡 Before investing, compare both options and calculate your expected earnings using our Treasury Bills Calculator.