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The short answer
Fixed deposit interest in Nigeria is normally simple interest: principal × annual rate × days ÷ days in the year, with withholding tax deducted from the interest before it is paid. On an example ₦2,000,000 for 91 days at 18%, that is about ₦89,753 gross on a 365-day basis and about ₦80,778 after 10% WHT.
A bank's rate sheet shows an annual percentage, but you will rarely leave money for exactly a year. To know what you will actually receive, you need the formula, the day count the bank uses and the tax deduction. This article walks through each with a worked example you can reproduce on a phone calculator.
The basic formula
Most fixed deposits pay simple interest for the tenor: interest is earned on the principal only, not on interest already earned during the same term.
- Gross interest
- Principal × annual rate × (days ÷ days in year)
- WHT
- Gross interest × WHT rate
- Net interest
- Gross interest − WHT
- Maturity value
- Principal + net interest
The rate is quoted per year (per annum). The days are the actual number of days from the value date, when the money is placed, to the maturity date.
Worked example
Example only: ₦2,000,000 placed for 91 days at 18% a year, with 10% WHT.
| Step | 365-day basis | 360-day basis |
|---|---|---|
| Gross interest | 2,000,000 × 0.18 × 91 ÷ 365 = ₦89,753.42 | 2,000,000 × 0.18 × 91 ÷ 360 = ₦91,000.00 |
| WHT at 10% | ₦8,975.34 | ₦9,100.00 |
| Net interest | ₦80,778.08 | ₦81,900.00 |
| Maturity value | ₦2,080,778.08 | ₦2,081,900.00 |
The same quoted rate pays about ₦1,122 more gross on a 360-day basis in this example, because the year is treated as shorter. Your deal slip or certificate should state the basis; if it does not, ask the bank which one it uses.
Where withholding tax comes in
Interest on deposits is taxed at source: the bank deducts withholding tax before paying you. Kuda's help centre, for example, states a 10% deduction on accrued interest on its savings plans. A quick check: with 10% WHT, your net rate is 90% of the quoted rate, so 18% gross becomes 16.2% net. For how the deduction works and when it can be credited, see withholding tax on interest.
Rollover, compounding and early exit
Rolling over principal and interest
Within one term there is no compounding. Compounding happens only if you roll the principal plus net interest into a new term. Example: roll the ₦2,080,778.08 above for another 91 days at the same 18% on a 365-day basis, and the second term's gross interest is about ₦93,378, more than the first because the base is bigger. The rate on rollover is whatever the bank offers on that day, not the old rate. See fixed deposit rollover.
Interest paid monthly or upfront
If interest is paid monthly, each payment is principal × rate ÷ 12 (or by days in the month), less WHT, and the total over the term matches the maturity version. If a bank pays interest upfront it may discount it, so the amount differs; see upfront vs at maturity.
Breaking the deposit
Early termination terms are set by each bank. Some pay a reduced rate for the days completed, some pay no interest. Kuda's help centre says breaking its Fixed Savings early means you lose the interest accrued and get your principal back. Read the bank's terms before you place the money; our article on breaking a fixed deposit early covers what to expect.
Comparing quotes with different tenors
Because rates are annual, a higher rate on a shorter tenor does not always mean more money. Example: Bank A offers 19% for 91 days and Bank B offers 21% for 91 days on ₦5,000,000, both on a 365-day basis with 10% WHT. Bank A pays ₦236,849.32 gross and ₦213,164.38 net; Bank B pays about ₦235,602.74 net. The difference of roughly ₦22,438 over three months is what the two percentage points are worth on that sum.
When tenors differ, convert each quote to the same period or think about what you would earn when the shorter deposit matures and is placed again, at a rate you cannot know in advance. A longer tenor locks the rate in, which helps if rates are expected to fall and hurts if they rise. Our guide to choosing a tenor covers that trade-off, and why rates follow the MPR explains what drives the quotes.
Steps to check your own deposit
- Find the value date, maturity date and rate on your deal slip, and count the days.
- Ask the bank whether it uses 365 or 360 days, and what WHT rate it deducts.
- Run principal × rate × days ÷ basis, then subtract WHT.
- Compare with the maturity amount the bank quotes. A difference of a few naira is rounding; more than that is worth a question.
Where Pryme fits
Pryme's Fixed and Investment Boxes show the current rate in the app before you lock money in; we do not quote it here because it changes. The same arithmetic lets you compare a Box with a bank quote on equal terms. See Savings Boxes.
Questions people ask
How do I calculate fixed deposit interest in Nigeria?
Multiply principal by annual rate by days, divide by the days in the year (365 or 360), then subtract withholding tax. Example: ₦2,000,000 × 18% × 91 ÷ 365 = ₦89,753.42 gross.
How much will ₦1 million earn in fixed deposit for 30 days?
It depends on the rate. At an example 18% a year on a 365-day basis: 1,000,000 × 0.18 × 30 ÷ 365 = ₦14,794.52 gross, about ₦13,315 after 10% WHT.
Is fixed deposit interest compounded in Nigeria?
Not within a term; it is simple interest. It compounds only if you roll principal and interest into a new term.
Why is my fixed deposit interest less than I calculated?
Usually withholding tax, a 365 versus 360-day basis, or counting the days differently. Ask the bank for the calculation.
Sources
- Kuda Help: Save money (savings rates and withholding tax, updated Aug 2026) · accessed Oct 2026
- Kuda Help: More on Fixed Savings (27 Feb 2025) · accessed Oct 2026
- Access Bank: 1 Year Fixed Rate Deposit application form (PDF) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.