How to earn 10% and above on your Fixed deposit account

Posted by Felix Okoli on Monday June 17, 2013 at 17:48:40:

There are probably a lot of Nigerian banks that offer fixed deposit accounts but they do not offer the same rates and so it's best you decide on which bank to partner with in order to get the best deal. Don't just put a high amount of money in your bank account and expect them to pay you higher interest. Get to know what they are offering and apply for a bank account that would give you what you want.

Opening and maintaining a Fixed deposit account is one of the cool ways of making money with a bank and if you've got funds that would remain idle for some time, you should invest it in an account that will earn your money even while you are sleeping.

A Fixed deposit account allows you to save your money for the long term and at the same time earns a higher interest on it.

In Nigeria, the interest on savings account is normally set at around 1% to 3% which is a far cry from the inflation rate or the rate of getting a loan from a bank. So most people who actually use a savings account do so just to save some small money So, if you are saving money in a bank, rather than allow it lose value in a savings account, go for a higher interest yielding account like that which a fixed deposit offers you.

The interest however on most fixed deposit accounts are around 10% or lower and so it wouldn't be wise to go to just about any bank and open an FD account and expect to get up to 10% on it.

I remember a bank where I made enquiry about their FD accounts and the rates they offered was just below 10%, somethng like 6%. I just had to move to a different bank that gave me that 10%. Since it's your money and if you've got like N200,000 and above and want to get a better incentive from your bank for saving it, then go for the ones that offer the best FD rates.

Lately, I've noticed some banks like Stanbic IBTC, Diamond bank and FCMB were all offering above 10% on such accounts. Other banks too like Access, Fidelity did offer varying rates so it's left for you to make your choice.

The bottomline is don't expect those banks with a lot of customers or funds to pay you the best rates. At times, it is even those not so popular but customer friendly banks that can pay you the best rate.
The idea is not going for everybody's bank where there is always a crowd. Chances are such banks are less likely to ffer you a good rate. Go for banks which tend to have less customer traffic but sound financial records and analyze their offers before signing up.

Getting 10% on your savings is something most banks in Nigeria don't offer and this is basically because they feel that customers don't come with huge capital. If you do however bring in a huge capital, you are more likely to get higher rates by negotiating with them.

So if you were saving money for your future home or car, I think it's smarter to just save it in a Fixed deposit account which would in a way, cushion your funds from the effects of inflation in Nigeria.

Kinds of people most likely to invest in a fixed deposit account
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- People who have capital but don't want a full time job
- Retired pensioners
- Salary earners
- Students who have income
- Companies who want to invest some capital
- People who just want a fixed income investment
- Shareholders who want a more stable returns on their capital