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Fixed Deposits vs Treasury Bills — Where to Park Chama Cash
Both lock your money for a set period. But returns, risk, and access differ significantly. Here's the comparison your chama needs.
Your chama has KES 300,000 to invest for 3-6 months. Fixed deposit or Treasury Bill? Let's compare.
Fixed Deposits
- Offered by: Commercial banks
- Returns: 7-10% (negotiable for larger amounts)
- Term: Flexible (1 month to 5 years)
- Minimum: KES 10,000-100,000 (varies by bank)
- Risk: Protected by Kenya Deposit Insurance Corporation up to KES 500,000
- Early withdrawal: Possible but with penalty (typically lose 50% of earned interest)
- Tax: 15% withholding tax on interest
Treasury Bills
- Offered by: Central Bank of Kenya
- Returns: 12-16%
- Term: 91, 182, or 364 days only
- Minimum: KES 100,000
- Risk: Zero default risk (government-backed)
- Early exit: Sell on secondary market (may gain or lose small amount)
- Tax: 15% withholding tax on interest
The Verdict
| Factor | Fixed Deposit | T-Bill |
|---|---|---|
| Return | 7-10% | 12-16% |
| Flexibility | High (any term) | Limited (91/182/364 days) |
| Minimum | Lower | KES 100,000 |
| Guarantee | Bank + KDIC | Government |
For amounts over KES 100,000: T-Bills win on returns. For amounts under KES 100,000: Fixed deposit (or Money Market Fund). For amounts you might need unexpectedly: Money Market Fund beats both.
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