Treasury Bills vs Fixed Deposits — Which Is Better for Nigerians in 2025?

In today’s uncertain economy, with rising inflation and a volatile Naira, many Nigerians are looking for safe and profitable ways to save and grow their money. Two popular low-risk options are Treasury Bills (T-Bills) and Fixed Deposits. But which is better?

Whether you’re a salary earner, business owner, or simply trying to make smarter financial decisions, understanding how these two investment vehicles work — and how they differ — can help you choose the right one for your goals.

In this article, we’ll break down both options, compare their pros and cons, and help you determine the smarter choice for your financial future.

What Are Treasury Bills?

Treasury Bills (T-Bills) are short-term debt securities issued by the Central Bank of Nigeria (CBN) on behalf of the Federal Government. They are used to raise funds for the government’s short-term needs and are considered one of the safest investment instruments available.

How it works:

• You buy T-Bills at a discount and get the full face value at maturity.
• For example, you might pay ₦950,000 for a ₦1,000,000 T-Bill, and receive the full ₦1,000,000 when it matures in 91, 182, or 364 days.
• The difference is your interest earned.

What Are Fixed Deposits?

Fixed deposits are savings products offered by commercial banks where you lock your money for a fixed period (e.g., 30, 90, 180, or 365 days) and earn interest on it. They are also low-risk, but unlike T-Bills, the bank pays you periodic interest instead of a lump sum at the end.

How it works:

• You deposit a lump sum with the bank for an agreed term.
• You earn a fixed interest rate throughout the period.
• The longer the tenure, the higher the interest (usually).

Treasury Bills vs Fixed Deposits — Key Comparisons

Feature	Treasury Bills	Fixed Deposits
Issuer	Central Bank of Nigeria	Commercial Banks
Tenure Options	91, 182, 364 days	30–365+ days
Minimum Investment	₦50,000 (via banks)	₦100,000 or more (varies by bank)
Risk Level	Extremely low (government-backed)	Low (depends on bank stability)
Interest Payout	Upfront (discounted)	Periodic or end of term
Liquidity	Semi-liquid (can be sold before maturity)	Less liquid (early withdrawal penalties)
Returns	Generally higher	Varies, but usually lower than T-Bills
Tax	Tax-free	May be taxed depending on the bank

Which One Has Better Returns?

As of mid-2025:

• Treasury Bills are yielding between 11%–14% per annum, depending on the tenor.
• Fixed Deposits offer around 6%–10%, with some microfinance banks offering slightly higher rates to attract depositors.

So, in terms of pure returns, T-Bills typically offer more — especially since they are tax-free and backed by the federal government.

✅ Pros and Cons of Treasury Bills

✅ Pros:

• Government-backed = extremely safe
• Interest is paid upfront
• Higher returns than most fixed deposits
• No tax on interest

❌ Cons:

• Not very liquid (you may lose money if sold early)
• May not beat inflation if inflation spikes

✅ Pros and Cons of Fixed Deposits

✅ Pros:

• Easy to open with your bank
• Predictable and fixed returns
• Option for monthly interest payouts

❌ Cons:

• Early withdrawal attracts penalties
• Lower interest than T-Bills
• Interest may be taxable

 Who Should Choose What?

Here’s how to decide based on your financial situation:

Choose Treasury Bills if:

• You’re looking for safe, short-term growth
• You want to preserve capital and beat inflation
• You won’t need the money urgently before maturity

Choose Fixed Deposits if:

• You prefer earning interest monthly or quarterly
• You already bank with an institution offering competitive rates
• You want easier access to funds, or shorter tenures (30–90 days)

How to Buy Treasury Bills in Nigeria

1.     Open an account with a commercial bank or stockbroking firm.

2.     Fill out the investment mandate form.

3.     Choose your preferred tenor.

4.     Pay the amount before the auction deadline.

5.     Receive your investment receipt and await maturity.

Alternatively, some fintech platforms and investment apps (e.g., I-Invest, Cowrywise, Chaka) also offer easy access to Treasury Bills and money market funds.

Final Verdict — So, Which Is Better?

If your primary goals are security, higher returns, and tax-free income, then Treasury Bills win. They are ideal for Nigerians looking to beat inflation and protect their wealth.

However, Fixed Deposits may suit you better if you want shorter-term savings, regular interest income, or have a loyal relationship with your bank.

Ultimately, the best option depends on your personal financial goals, income stability, and access to funds.

A well-rounded strategy might even include both, especially if you’re building a diversified portfolio of low-risk income-generating assets.

Disclaimer:

This article is for informational purposes only and does not constitute financial advice. Please consult a certified financial advisor before making investment decisions.