Most people do not know what rate they are earning on their savings. That is not carelessness — commercial banks do not put it on the statement, and the figure they do publish is often a range that starts at the number almost nobody gets.
This is the arithmetic, and it takes about two minutes.
Work out what you earn today
Take the balance you keep in your savings account across a normal year. Not the peak, and not the balance the day after salary — the amount that is genuinely sitting there most of the time. Multiply it by the rate.
| Rate | Interest in a year | What that is |
|---|---|---|
| 1.15% | ₦5,750 | The regulated minimum on a commercial savings account |
| 4% | ₦20,000 | A typical commercial bank savings rate |
| 12% | ₦60,000 | Flex Savings, withdraw any time |
| 16% | ₦80,000 | Target Savings, until your date |
| 22% | ₦110,000 | Fixed Savings, locked for 365 days |
The gap between the first row and the last is ₦104,250 a year on the same ₦500,000. That is not a small optimisation. On a trader’s float it is a month of stock.
Why the rate differs so much
A bank pays you out of what it earns lending your money to somebody else. A commercial bank lends a lot of its deposits to the government and to large corporates at low risk and low return, and it has a very large cost base to carry. A microfinance bank lends to traders and small businesses at a higher rate, and passes more of it back.
The trade-off is real and you should know it: the higher rate exists because the lending behind it is to smaller borrowers. That is why the NDIC deposit insurance matters, and why you should check it covers any bank you are considering.
The three questions to ask
What rate am I actually being paid, as a number, today? If the answer is a range, ask which end of it applies to your balance.
What do I give up for a higher rate? Usually access. A rate you cannot reach for twelve months is only worth it on money you genuinely will not need.
Is the deposit insured, and by whom? In Nigeria that is the NDIC, and the cover is per depositor per bank.
A worked example
Chidi keeps about ₦800,000 as trading float. He knows he needs roughly ₦300,000 of it in any given month for restocking, and the remaining ₦500,000 has sat untouched for two years.
- ₦300,000 in Flex Savings at 12% — reachable tomorrow, earns ₦36,000 a year.
- ₦500,000 in Fixed Savings for 365 days at 22% — earns ₦110,000 a year.
- Total: ₦146,000 a year, against ₦9,200 in his old commercial savings account.
If he needs the locked money early he can borrow against it rather than break it, which costs him less than the interest he would give up.