Nigeria's two popular low-risk instruments — fixed deposits/Certificates of Deposit (CDs) and Treasury bills — both look similar but differ on liquidity, rate stability and issuer. Here is the comparison.
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What Each Is
CDs/Fixed deposits: you lend to your bank at a fixed rate for a fixed term. Treasury bills: you lend to the government via auction, bought at a discount.
Key Comparison
- Issuer risk: T-bills carry sovereign backing; CDs depend on the bank's health (guaranteed only up to NDIC limits).
- Liquidity: T-bills can usually be sold before maturity; CDs often attract penalties for early exit.
- Rates: both track the interest-rate cycle; T-bill rates move with auctions.
- Minimums: both allow moderate retail minimums (often ₦100,000 for T-bills; bank-dependent for CDs).
Which To Prefer
Use T-bills for government-backed safety and flexibility; use bank fixed deposits for short, simple deals with your bank. Diversify across both where sensible.
FAQ
Are T-bills riskier than bank deposits?
Generally the opposite — sovereign-backed bills sit above bank credit risk.
Which pays more in Nigeria?
It varies with rates; compare current auction and bank offers.
Related: T-Bill Rates and Invest via GTBank.