Here is why your idle funds shouldn’t be in a savings deposit!!!

The Central Bank of Nigeria a few weeks back concluded its monetary policy committee meeting increasing the rate at which the Central Bank lends money to commercial bank from 12% to 14%. That was the highest jump in history.

The effect of such price increases is that the lending rates equally move in the same direction ensuring that what lenders pay for their loans rises in tandem. Commercial lending rates have been in the northwards of 24% since then we started experiencing the drop in the price of crude oil.

With the MPR now increased, analysts also expect to see a movement in the rate at which the government pays when it borrows money from the public. It does this via Treasury Bills or Bond Issuance.

One rate which hardly follows policy rate changes are your savings deposit rates. Thus , despite an increase in MPR and mending rates, deposit rates have remain stubbornly low. This is even more shocking when you consider that the inflation rate is currently at about 16.5%.

What this means?

This basically means that idle funds kept in your savings bank account at an interest rate of about 3-3.5% is a waste of your money. You are probably better off depositing that money in fixed deposits.

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