How To Make Money From Treasury Bills & Fixed Deposit In Nigeria

You can actually make money for either fixed deposits or treasury bills in Nigeria.
In this article I will try to explain what treasury bills and fixed deposit means as simply as possible and how you can make money from it.
A lot of people are confused with all the banking terminologies about treasury bills and fixed deposits,let me explain to you what it's all about.

Treasury Bills & Fixed Deposit 

Imagine lending money to the federal government?

Yes,that's basically what treasury bills is all about.

With treasury bills,you are borrowing money to the federal government via the Central Bank of Nigeria (CBN).

Now lets take for example,you bought a treasury bill worth of N500,000 at 10 per cent discount rate,N450,000 will be deducted from your account,leaving you with a balance of N50,000.

What this means is that the CBN has paid you your interest of N50,000 upfront, meaning that you will earn a total of N550,000.

When buying treasury bills from the CBN through your bank,you have the option of borrowing your money for over 91 days, 182 days or 364 days.
When it comes to fixed deposits,you are not lending or borrowing money to the federal government or the central bank of Nigeria CBN,what you are doing is basically lending money to your financial institution or your bank,with the agreement that the bank will pay you at the expiration of a particular time ( 4 weeks - 1 year).

Now you know the difference between fixed deposits and treasury bills.

Which One Should You Go For Treasury Bills Or Fixed Deposit? Advantages & Disadvantages

1. Risk Factor

Treasury bills are seen as a risk free investment because you are in business or agreement with the federal government of Nigeria and its very unlikely that the government will default or go broke and refuse to pay back the loan borrowed from you.


While fixed deposit is different,your money is in the hands and mercy of the bank you bank with,if unfortunately the bank fails or closes,your fixed deposit will be lost immediately.

2. Interest Rate

Fixed deposits or Treasury bills? Which gives better interest rate.

There has been a lot of debate concerning this issue,with a lot of people saying that treasury bill gives a much lower interest rate and vice versa.

When it comes to interest rates,so many people believe that treasury bills offer a better interest rate.

3. Payment 

The sole aim of venturing into fixed treasury bills & fixed deposit is to incur profit.

When it comes to fixed deposit,most nigerian banks will pay you interest along with the 
principal at the end of the speculated period,while some banks will pay before upfront,it all depends on the agreement,while fixed treasury bills usually pay upfront.

4. Taxes

The advantage of Treasury Bills is that it is exempted from taxes,so no deductions will be made from your interest,however you might be charged some fee by your financial institution or bank for the services rendered on your behalf.

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This fee is usually very small and insignificant while on fixed deposit attracts a withholding tax rate of 10% that will be deducted by your bank and paid to tax authorities.

5. Emergency

Imagine a scenario when your cash is in fixed treasury bills or fixed deposit and your facing an emergency that needs a substantial amount of cash.

You can easily get your cash anytime with Fixed Deposits.
All you need to do is to go to your bank and ask them to liquidate your account before the agreed date.

The bank will pay you interest for the period your money was fixed,but in most occasions you will incur charges from the bank for early withdrawal,while in 
Treasury Bills it is not easy and in some cases impossible to withdraw your money.

You can withdraw your money from Treasury Bills & Fixed Deposit,its just that the probability of success when it comes to money withdrawal is higher in Treasury bills.

6. Collateral

When it comes to collateral,Treasury Bills can be used as collateral to collect loan from the bank as it is seen as a future risk free asset by banks,whereas fixed deposit might not be 

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used as collateral because your bank might not be seen as a strong bank or has a low credit rating.
So if you are looking for a collateral from a bank,you can use your treasury bills. 

7. How To Buy / Purchase Treasury Bills & Fixed Deposit 

Simply walk into your bank's customer care section and request for information concerning fixed bank deposits and treasury bills,you can easily make inquiries from Nigerian banks like First Bank Plc,GTBank,Zenith Bank,UBA Etc


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