Central Bank of Kenya (CBK) data shows fixed deposit accounts gained Sh64.8 billion in the quarter ending June, 2021.
While the decision to keep one’s finances away for a rainy day is laudable, the big question remains, what returns can an ardent saver expect from choosing a fixed deposit over an ordinary savings account?
“The best way to safeguard one’s investment from unprecedented and volatile market movement is by investing in a fixed deposit account. With the unprecedented Covid-19 Pandemic that swept the globe over the past eighteen months, fixed deposit accounts have grown in popularity in Kenya,” said Maisha Microfinance chief executive Ireneus Gichana.
Understanding how a fixed deposit account works
A fixed deposit account is like a savings account; however, the key differentiator is that fixed deposit accounts accrue higher interest based on the duration agreed upon between the individual and the bank.
This means that an individual with a fixed deposit account is required to wait for at least 30 days to 12 months or more without touching their money. The expectation is that the longer you keep money in the account, the higher the interest obtained.
“Fixed deposits are ideal when you want to grow your savings in a steady manner over a given time to use the funds for a larger investment such as home or land ownership or even if you’ve come into a windfall e.g., from a promotion at work or you’ve received a bonus and need a safe place to keep the funds before making a major decision on how to invest it,” Gichana explains.
He says, with savings accounts, the priority is given to quick retrieval of funds when required e.g., for an emergency such as replacing a car battery or even purchasing a new phone after an unfortunate technology fail as is common with most devices.
“In Kenya, many financial institutions offer fixed deposit accounts each with varied interest rates based on the duration and the amount being fixed. Just like with any other investment, it is important to conduct due diligence before settling on one institution to trust with your hard-earned cash. Regulated entities rank higher as sound investment options because they operate within certain rules and regulations aimed at protecting public interests,” he added.
Armed with what you need to look out for before investing, here is a list of some of the banks with the best fixed deposit rates.
Maisha Microfinance Bank
The Microfinance gives the best fixed deposit interest rate in the country of up to 11.25% per annum. This is higher than any other officially published fixed deposit rate in the market. With a product of Maisha Microfinance Bank dubbed M–FANISI Kenyans can open a fixed deposit account with as little as 500 Kenya Shillings from the convenience of their phones.
M-FANISI is mobile operated account and anyone with an Airtel Money or MPesa line can access the product by simply dialling a USSD code and depositing up to 1M for 1-Month, 2-Months, 3-Months and so on upto 12- Months (One year).
Over the past four years Maisha Microfinance Bank has received recognition and awards for the Fastest Growing Microfinance Bank in Kenya, the most innovative and even scooped the Gold Mark award at the CIO100 Annual Symposium and Awards Gala for its excellence in enterprise information technology adoption.
KCB offers a competitive fixed deposit rate for local and foreign currencies. With the KCB fixed deposit rate account, an individual determines the returns they get from their investment. Since the investment amount is not limited; they get to decide the initial amount to save. The bank, however, has a condition, money must remain in the fixed deposit rate account for the agreed period. KCB offers an interest rate of up to 6% p.a.
The fixed deposit account is ideal for individuals who are interested in saving and earning appealing interest rates from their savings. The minimum initial amount is Sh20,000, and the fixed deposit account interest rates are negotiable.
One of the best features of the Equity Bank fixed deposit account is it allows for premature withdrawals of your deposits. Therefore in the case of an emergency, you can withdraw money even before the agreed duration has reached. The minimum interest rate is 6.65 percent per annum.
Fixed deposit accounts in I&M Bank are opened for fixed contracted periods, which range from one month to one year. The minimum deposit is Ksh. 50,000. The bank boasts of having attractive rates, thus providing customers with long-term savings growth opportunities.
Fixed deposit accounts can be opened in the following currencies; Kenya Shillings, US Dollars, Euro, GB Pounds, and South African Rand.
Standard Chartered Bank
The fixed deposit account is available to clients of this bank in Kenya Shillings, US Dollar, Pound Sterling, Euro, Japanese Yen, Australian Dollar, and the South Africa Rand. You can access personal loans and overdrafts equivalent to 80 percent of the balance in the Fixed Deposit Account. The minimum deposit is Sh100,000.
CFC Stanbic Bank
At CFC the fixed deposit has no monthly management fee. There is also no limit as to the maximum amount one can invest and interest is also calculated upon maturity.