The amount of money Kenyans have saved in fixed deposit bank accounts has crossed Sh. 2 trillion. According to data from the Central Bank of Kenya (CBK), the amount Kenyans have saved in fixed deposit bank accounts was Sh. 2.03 trillion as at July 2024.
This was equivalent to a growth of around 13.6 per cent from the Sh. 1.76 trillion that Kenyans had saved in these type of accounts as at July 2023.
These savings have risen as Kenyans seek passive income from various instruments including fixed deposit accounts which attract a higher interest in comparison to the traditional savings bank accounts.
For instance, savings in fixed deposit bank accounts attracted interests of up to 11.28 per cent in comparison to savings bank accounts which paid out interests of up to 4.56 per cent.
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The interest paid out on fixed deposits also increased in comparison to the previous year’s. As at July 2024, this interest stood at 11.28 per cent while as at July 2023, banks paid out 8.1 per cent.
In the same vein, money in savings accounts decreased from Sh. 1.7 trillion in July 2023 to Sh. 1.6 trillion as Kenyans chased higher returns. Nonetheless, returns on money put in savings accounts increased from 3.97 per cent to the current 4.56 per cent.
As Kenyans chase better returns, options for additional passive income including fixed deposits, money market funds (MMF), treasury bills (T-Bills) and treasury bonds have become highly attractive due to the higher than average interest rates being offered.
A spot check by Bizna Kenya shows that the Central Bank placed the savings rate at 4.62 per cent as at August 2024. At the same time, the deposit rate was at 11.59 per cent as at August 2024.
In contrast, the inflation rate stood at 3.56 per cent as at September 2024. Currently, the 91-day treasury bills are hovering around the 14.7 per cent rate.
