Something urgent comes up and the money you have is locked. The instinct is to break the deposit. Almost always, that is the more expensive of the two options, and the arithmetic is not close.
What breaking costs
A Fixed Savings deposit pays its rate on the condition that it runs to maturity. Break it early and it is repriced to 8% for the whole period — not just the remaining months.
| Interest earned | Difference | |
|---|---|---|
| Left to mature | ₦220,000 | — |
| Broken at month 9, repriced to 8% | ₦60,000 | −₦160,000 |
What borrowing against it costs
A savings-backed loan lets you borrow up to 70% of the deposit at 3.5% a month. The deposit stays where it is and keeps earning 22%. Only the amount you borrowed is placed on hold.
| Amount | |
|---|---|
| Interest at 3.5% monthly | ₦31,500 |
| Management fee (1%, one-off) | ₦3,000 |
| Total cost | ₦34,500 |
| Interest the deposit still earns | ₦220,000 |
The comparison, in one line
Breaking the deposit costs ₦160,000. Borrowing against it costs ₦34,500. The same ₦300,000 lands in your account either way.
The hold on your deposit is released the same day the loan is repaid. There is no penalty for repaying early, and the interest is charged only for the months you actually used.