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Difference Between Fixed Deposit and Treasury Bills

Difference Between Fixed Deposit and Treasury Bills

#TreasuryBill #Money #Deposit



treasury bills - fixed income

Fixed Deposit

A Fixed Deposit is a type of short-term financial investments sold by banks to its depositors. A depositor invests in a fixed deposit when he deposits his money with a bank in exchange for interest for a predetermined period. Fixed deposits can often be for One Month, Three Months, 6 Months and 1 year. In return for fixing your money with the bank for a fixed period, the interest paid on fixed deposits is always higher than the interest that the bank pays on a regular deposit. Fixed deposits have the following characteristics;

  • They are for a fixed period of time
  • They are mostly sold by banks
  • The interest rate is higher than other regular deposit rates
  • The interest paid to the depositor is subject to 10% withholding tax
  • The depositor can decide to call back his cash ahead of the maturity date for the fixed deposit
  • However, this can come at a cost to the depositor
  • Interest rates on fixed deposits vary from bank to bank, from customer to customer and from amount to amount
  • The bank makes money by lending out the money you placed in the fixed deposit at a higher rate to borrowers. The difference between the interest it pays you on the fixed deposit and the interest its lenders pay is the banks profit.
  • Fixed deposits are sold daily by the bank to its willing customers
  • The banks pays the depositor both the principal and interest upon maturity. However, a customer can request for a roll-over
  • Fixed deposits are secured as long as the bank remains solvent.
  • If the bank goes bust, you loose your money too.
  • Fixed deposit can be used as a collateral  but not accepted by all banks

[Read Also: 9 TIPS to KNOW when NOT to INVEST]


Treasury Bills

Treasury Bills on the other hand is also a short term financial investment but sold by the Central Bank of Nigeria. An investor in treasury bills lends money to the CBN for a stipulated period in exchange for interest. Treasury bills are usually for a period of 91days, 182 days and 364 days. Treasury Bills have the following Characteristics

  • Treasury Bills are sold bi-weekly or as determined by the CBN
  • The CBN puts a limit to the amount of treasury bills it wishes to sell
  • The CBN uses the funds from Treasury Bills to control money supply in the economy
  • Interest rates for treasury bills are determined by an auction and can vary from investor to investor, amount to amount and tenor to tenor
  • Interest on treasury bills are paid upfront
  • The CBN pays an investor in treasury bills upon maturity and does not roll-over
  • Treasury Bills can only be bought or resold at the Over The Counter Market (OTC)
  • An investor who can’t wait till maturity to cash out on the treasury bill can sell his investment at the OTC market
  • Treasury Bills are tax free
  • Treasury Bills  is not secured by any asset but are backed by the full faith and credit of the Nigerian Government
  • Treasury bills can be used as a collateral and is accepted by all banks

[Read Also: CBN says commercial banks can invest in Treasury Bills for now]

This article was originally published by Nairametrics on 5th February, 2014

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Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.



  1. marshal

    January 19, 2015 at 12:20 pm

    i thinking our banks are short changing us, becos i hav fixed deposit UBA @8per cent p.a. Ugodre where can i get the TB Please advise

    • Anonymous

      July 17, 2016 at 1:33 pm

      Go to ur bank

  2. Unyime

    July 28, 2019 at 5:49 pm

    Please can you let us know what happens if I buy treasury bill through a bank and suddenly, the Bank ceases to exist, how do I get back my money bearing in mind, that I must have invested the money through my bank account of the failed bank. Thanks

  3. Anonymous

    October 3, 2019 at 6:18 pm

    Which of this two is better in terms of investing I really need an answer

    • Anonymous

      October 4, 2019 at 3:58 pm

      If it is the kind of money ,you do not really need now,treasury bills is better and safer.

    • Samir Sanusi

      October 4, 2019 at 5:40 pm

      It depends on what you are looking at, but T-Bills is a better idea.

  4. Anonymous

    October 4, 2019 at 8:09 am

    Please tell me more about treasury bill – how does one invest in it, minimum investment, interest rate?

  5. Anonymous

    October 4, 2019 at 5:24 pm

    it totally depends on the rate of interest the bank is giving you. but typically fixed deposit interest rates are higher. if you need to settle an urgent you might consider treasury bills because they pay upfront but over a period of one year FIXED DEPOSIT is way better

  6. Anonymous

    October 4, 2019 at 8:43 pm

    If minimum months of investing in
    Treasury bill how then could my bank solo tb for two months.?

  7. Scalla

    October 4, 2019 at 9:26 pm

    Thanks for this information. Can there be a post of mutual funds??

  8. Jokoflex

    October 5, 2019 at 10:45 am

    I have tried the two( T bill & fixed deposit) the problem is that the interest rate has dropped drastically this days. T.B used to be as high as 13 % before, but now the last one l did was 9. something %. Pls is it possible for my bank to play pranks on all of these.

  9. fela

    October 20, 2019 at 8:19 am

    Can a treasury bill proof of investment serve as a loan collateral?

  10. Ademola Yusuf

    December 22, 2019 at 11:12 pm

    This country is a mess, CBN-NIGERIA Stop individual…to participated in T Bills.But why.

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Lagos to open churches, mosques from June 19, limits gatherings to 40% capacity

Religious bodies to open at a maximum of 40% of their capacity and we’ll be working with them as being expected by the Lagos State Safety Commission.



Lagos state governor issues new guidelines for lockdown, consider full reopening of its economy

Lagos State government says religious gatherings would be allowed to reopen on June 21, 2020. This was disclosed by the State Governor, Babajide Sanwo-Olu on Thursday during a press briefing at Government House, Marina.

According to the Governor, mosques are to reopen from June 19 while churches are to begin services from June 21 and only Friday and Sunday services should be held for now, as other regular services, including night vigils, must be put on hold.


He said, “There will now be restricted openings of religious houses based on compliance that we have seen and reviewed with the Safety Commission.

“From 14 days time, precisely on the 19th of June for our Muslim worshippers and from the 21st of June for our Christian worshippers, we will be allowing all of our religious bodies to open at a maximum of 40% of their capacity and we’ll be working with them as being expected by the Lagos State Safety Commission.

“But we know that these places of worship have different sizes but even if your 40% capacity is really so large, you cannot have beyond 500 worshippers at once, and keeping that maximum 40% capacity is really important.

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“We will be encouraging people to have more than one service and ensure that they keep their premises clean, disinfect before another round of worship can take place.

“We will also be advising that there should only be mandatory Fridays and Sunday services. All other night vigils and services must be put on hold for now until we review our current situation.

Sanwo-Olu added that the state will also be advising that persons below the age of 15 because of how well they walk around should be excused from the places of worship and citizens that are above the age of 65 should not be allowed into these places of worship.

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FG may lift ban on interstate movement on June 21

Interstate movement may resume on June 21.



interstate, NURTW and Universal Insurance, NURTW insurance partnership, Commercial buses in Nigeria

The Federal Government may lift the ban placed on interstate movements on June 21, 2020.

This was disclosed by special adviser to President Muhammadu Buhari on new media, Bashir Ahmad on Thursday via his Twitter handle.


He stated, “Interstate movement may resume on June 21, the National Coordinator of the Presidential Task Force on COVID-19, Dr Dani Aliyu, gave the hint recently, as domestic flights expected to resume on June 21.”


READ ALSO: U.S dollar gains, America sanctions Chinese Airlines from flying into the U.S.

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Meanwhile, the FG last Monday, June 1, 2020, announced a cautious advance into the second phase of the national response to COVID-19. As part of the measure in the new phase, the FG has announced the full reopening of the financial sector.

This was announced by the national coordinator of the presidential task force on COVID-19, Dr Aliyu Sani. He said that the banks will now be allowed to operate at normal working hours five days a week as against the restricted time of 2 or 3 pm that was announced during the first phase of the easing of lockdown.

READ ALSO: Osinbajo sets up committee on reopening of Nigerian economy, suspends loan deductions for states


The Presidential Task Force also gave the green light to hotels to reopen but must do so based on the guidelines rolled out by the National Centre for Disease Control (NCDC). They are to maintain non-pharmaceuticals intervention. However, gyms, cinemas, parks, nightclubs and bars are to still remain closed until further evaluation.


The restaurants, other than those in hotels must remain closed to eat-ins but are allowed to prioritize and continue to practice the takeaway measure that has been in place since the first phase.

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Business News

The conundrum in the retail pricing of PMS

Considering the landing cost of petrol is largely influenced by the prices of crude oil in the international market, we think prospects of continued recovery in crude oil prices is likely to put upward pressure on the cost of importing petrol.



PPPRA, NNPC, Reduce funding oil subsidy - IMF to Nigeria , Oil marketers, PENGASSAN call for subsidy removal 

The decision of the Petroleum Products Pricing Regulatory Agency (PPPRA) to reduce the pump price of Premium Motor Spirit (PMS), also known as petrol, to N121.50 per litre from N123.50 per litre has been met with stiff resistance from oil marketing companies (OMCs). The Independent Petroleum Marketers Association of Nigeria (IPMAN) have also stated that it impossible for its members to sell petrol at the new price floor of N121.5 per litre.

We recall that on 18 March 2020, the Federal Government (FG) reduced the retail price of Premium Motor Spirit (PMS) by c.14% to N125/litre from N145/litre, following the global pandemic which led to an unprecedented decline in oil prices and by extension a reduction in the landing cost of petrol. Subsequently, the FG announced a further reduction to N123.50 which took effect on April 1, 2020. Earlier this month, the FG directed a reduction in the pump price of Premium Motor Spirit (PMS) for the third time to N121.50 per litre. We note that the adjustments in the retail price is in line with the directive from PPPRA on a monthly review of the pump price, depending on prevailing market realities.


READ MORE: The good, bad and ugly of low oil prices for Nigeria

In our view, considering the landing cost of petrol is largely influenced by the prices of crude oil in the international market, we think prospects of continued recovery in crude oil prices is likely to put upward pressure on the cost of importing petrol. With the gradual relaxation of lockdown measures by countries who are starting to reopen their economies alongside the historic production cuts of OPEC+ which took effect last month (a 9.7mb/d oil production cut for May and June), we think the risks to oil prices are tilted to the upside in the near term.

Since hitting a two-decade low of US$19.33 on 21 April when the retail price of petrol was pegged at N123.50, brent crude prices have gained c.105% to close at US$39.54 on 3 June. Against this backdrop, we expect that the retail price of petrol should rather be adjusted upwards to reflect current market realities. The current situation appears no different from historical trends where the FG becomes reluctant to effect an upward adjustment in the retail price of petrol during periods of rising crude prices. This has often resulted in the renewed payments of the age-long fuel subsidy. We also think oil marketing companies (OMCs) who have only recently begun to import petrol alongside the Nigerian National Petroleum Corporation (NNPC) due to more favourable pricing could halt importation once again if domestic retail prices become unfavourable.

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