How To Open A Fixed Deposit Account In Kenya And What It Really Pays (2026)

A fixed deposit is the least glamorous product in Kenyan banking and, for a certain kind of saver, one of the most useful. You hand the bank a lump sum, you agree not to touch it for an agreed period, and the bank pays you a rate it has committed to in writing. No market risk, no unit prices, no app that changes its terms in a push notification.

The catch is that most Kenyans open one without ever checking what the rate is worth after tax, or noticing that the bank next door was paying nearly three times as much for the same money. This guide covers what fixed deposits are actually paying in 2026, what the taxman takes, how to open one properly, and — just as important — when a fixed deposit is the wrong home for your money.

What a fixed deposit account actually is

A fixed deposit (sometimes called a term deposit or, when the term is very short, a call deposit) is a contract. You deposit an agreed amount for an agreed period — typically anything from one month to five years — and the bank pays an agreed rate of interest. At maturity you get your principal back plus the interest, less tax.

Three things distinguish it from the ordinary savings account most people already have:

• The rate is fixed for the term. If the Central Bank cuts rates the month after you lock in, your rate does not move. That works both ways: if rates rise, you are stuck at yesterday's number until maturity.
• The money is genuinely locked. You cannot spend it with a card or send it on M-Pesa. That is a feature, not a bug, if your problem is that money leaves your account faster than you can explain.
• The rate is meaningfully higher. This is the whole point, and the numbers below show how much higher.

The bank is not doing you a favour. It is buying certainty. A savings balance can leave tomorrow; a 12-month deposit cannot, so the bank can lend against it with confidence, and it pays you for that certainty.

What fixed deposits are actually paying in Kenya

The Central Bank of Kenya publishes a weighted average of what commercial banks pay depositors every month. It is the single most useful number in this conversation, and almost nobody reads it.

For June 2026, CBK's published figures were:

Read those first two lines again. The average savings account in Kenya paid 3.32%. The average deposit — which is dominated by fixed and term deposits — paid 6.84%. Moving money you were never going to spend from one to the other roughly doubled the rate.

The trend has been gently downward through 2026: the average deposit rate was 7.03% in January, 6.92% in February, 6.86% in March, 6.88% in April and 6.80% in May before settling at 6.84% in June. That tracks CBK's own policy stance — the Central Bank Rate was cut to 8.75% on 9 June 2026, down from 9.00% in December 2025 and 9.25% in October 2025. When the CBR falls, deposit rates usually follow within a few months.

The average, though, hides the thing that should actually change your behaviour: the spread between banks is enormous. CBK publishes a bank-by-bank table alongside the average, and in June 2026 the range ran from roughly 3% at the bottom to roughly 11% at the top. Large foreign-owned banks flush with cheap deposits sat near the floor; smaller and mid-tier Kenyan banks competing for funding sat near the ceiling. Same shilling, same lock-up period, three times the return.

Before you deposit anything, open CBK's Commercial Banks Weighted Average Rates page and read the current month's table. It takes five minutes and it is the highest-value five minutes in this entire article.

What you take home after tax

Here is where a lot of published "best rate" tables quietly mislead people, because they quote gross.

The Kenya Revenue Authority charges withholding tax of 15% on bank interest. Your bank deducts it before the money reaches you and remits it to KRA — you never see the gross figure land. For resident individuals this is a final tax: once it has been withheld on qualifying interest, you owe nothing further on it. You still file your annual return, but you are not taxed on that interest a second time. If you are unsure how your return works, our walkthrough on filing your KRA returns on iTax covers the process.

Work it through on KSh 500,000 held for 12 months:

The gap between leaving KSh 500,000 in a savings account and placing it with a bank near the top of CBK's table is roughly KSh 26,000 a year, after tax, for exactly the same amount of work and the same deposit protection. That is the actual prize here, and it is won by reading a table, not by taking risk.

One honest caveat on all three rows: interest is only worth something in real terms if it beats inflation. Check the current inflation rate in the Kenya National Bureau of Statistics monthly release before deciding that a rate "sounds good". A 6.84% gross rate that nets 5.81% is a real gain in a low-inflation month and a slow loss in a high-inflation one.

How to open a fixed deposit, step by step

The process is unglamorous and mostly the same everywhere.

1. Have a transactional account at the bank first. Most banks will only open a fixed deposit for an existing customer, because the deposit needs a source account to be funded from and a destination account for maturity proceeds.
2. Get your KYC documents together. National ID or passport, KRA PIN certificate, a passport photo, and — depending on the bank — proof of address. If the source of funds is unusual (a land sale, a settlement, a diaspora transfer), expect to be asked to evidence it. This is anti-money-laundering compliance, not suspicion of you personally.
3. Ask for the rate in writing, and then negotiate it. This is the step people skip. Fixed deposit rates are frequently not fixed by a public price list — Equity Bank's own product page for its Call/Fixed Deposit Account, for example, states outright that the account "provides the allowance to negotiate the interest rate". If you are placing a meaningful sum, ask what the bank can do, and mention that you are comparing. The worst outcome is that they say no.
4. Choose your term deliberately. One month, three months, six months, twelve months and longer are all common. Equity's own terms state a minimum period of one month and a minimum fixing amount of KSh 50,000; minimums elsewhere commonly sit somewhere between KSh 10,000 and KSh 100,000, but confirm the number with the specific bank rather than trusting a comparison table.
5. Decide how interest is paid. Some deposits pay interest at maturity; others pay monthly or quarterly into your current account. If you need income, take the periodic option. If you are compounding, take it at maturity or reinvest it — you can model the difference with our compound interest calculator.
6. Read the maturity instruction. You will be asked what happens on the maturity date. See the next section, because this is where money quietly leaks.
7. Keep the deposit certificate or confirmation advice. It is your evidence of the contracted rate if the bank later disputes it.

The terms that matter more than the headline rate

Automatic rollover. Many fixed deposits default to renewing themselves at maturity — at whatever rate the bank is offering that day, which will not be the rate you negotiated. People discover years later that a deposit they opened at 10% has been quietly rolling at 5%. Diarise your maturity date. Treat every maturity as a fresh negotiation.

Early withdrawal. Breaking a fixed deposit before maturity almost always costs you. Some banks forfeit all accrued interest, some pay a reduced rate, some charge a break fee, and a few — Equity's page states premature withdrawal is allowed on its call/fixed deposit account — are more flexible. The terms vary enormously between banks and even between products at the same bank, so read the actual contract clause rather than assuming. The safe planning assumption is that this money is gone until maturity.

Ladder rather than lock. If you are nervous about tying up everything, split the sum into several deposits maturing at staggered intervals — say four deposits maturing three months apart. Something matures every quarter, so you always have access to a slice without breaking anything, and you keep re-pricing at current rates. This is called laddering and it is the standard answer to "what if I need it?".

Simple versus compound. Confirm whether the quoted rate is simple interest over the term or compounds. On a 12-month deposit the difference is small; over three or five years it is not.

How your money is protected, and the KSh 500,000 ceiling

Deposits in banks and microfinance banks licensed by CBK are covered by the Kenya Deposit Insurance Corporation under the Kenya Deposit Insurance Act, 2012. Cover is KSh 500,000 per depositor, per institution, it is automatic, and you do not apply or pay for it — member institutions fund it through annual contributions.

Two consequences follow directly:

• Per institution, not per account. Holding KSh 400,000 in a savings account and KSh 400,000 in a fixed deposit at the same bank does not give you KSh 800,000 of protection. It gives you KSh 500,000 across the combined position.
• Splitting across banks multiplies cover. KSh 500,000 at each of three KDIC member banks is fully covered; KSh 1,500,000 at one bank is not. If you are chasing the highest rates you will often end up at smaller banks, and that is exactly where staying inside the cover limit matters most.

KDIC ran a public consultation in 2026 proposing to double the limit to KSh 1,000,000. Treat that as proposed, not law — plan around KSh 500,000 until KDIC confirms otherwise. Our explainer on how KDIC deposit insurance works goes deeper on what is and is not covered.

Fixed deposit versus the alternatives

A fixed deposit is one of four sensible homes for a lump sum of Kenyan shillings, and it is not automatically the best one.

Versus a money market fund. MMFs are open-ended, usually let you withdraw in a couple of working days, and have historically quoted yields competitive with or above bank deposit rates — but the yield is variable and not contractually guaranteed, and your money sits with a CMA-licensed fund manager rather than under KDIC cover. Interest is likewise taxed at 15%. If access matters more than certainty, the MMF usually wins; see how money market funds work in Kenya and the head-to-head in MMF vs SACCO vs bank savings.

Versus Treasury bills. T-bills are direct lending to the government, sold at a weekly CBK auction in 91, 182 and 364-day tenors, with a KSh 50,000 minimum for non-competitive bids through DhowCSD. The credit risk is sovereign rather than a single bank, and the rate is set at auction, so it is not knowable in advance. Interest is taxed at 15%. Our guide to Treasury bills and bonds covers the mechanics.

Versus a SACCO. SACCOs regulated by SASRA often pay competitive dividends and rebates, but returns are declared annually rather than contracted, funds are typically far less liquid, and SACCO deposits are not under KDIC. Read how to choose a SACCO before assuming a high advertised dividend is a like-for-like comparison.

Versus doing nothing. Leaving the money in a savings account at 3.32% is a real decision with a real cost, quantified in the table above.

Who a fixed deposit is genuinely right for

It suits you if you have a lump sum with a known future use — school fees in January, a land payment in nine months, a wedding — and losing it is unacceptable. It suits you if the honest problem is behavioural and the lock is the point. And it suits you if you value knowing the exact shilling amount that will arrive on a specific date.

It does not suit you if the money is your emergency fund. Emergency money must be reachable the day the emergency happens, which is precisely what a fixed deposit prevents; build that separately, as set out in our guide to building an emergency fund. It does not suit you if you carry expensive debt — clearing a loan at 14% beats earning 5.8% net, every time, with no exceptions. And it is a poor vehicle for a 20-year goal, where growth assets like NSE-listed shares have a role that cash cannot fill. For the bigger picture, our pillar on where to save and invest in Kenya puts all of these side by side.

Mistakes that quietly cost money

• Comparing gross rates to net returns. Always compare after the 15% withholding tax, or you are not comparing anything.
• Letting a deposit auto-roll unattended. The renewal rate is rarely the rate you negotiated.
• Accepting the first rate quoted. If the bank's own literature says the rate is negotiable, negotiate.
• Banking your whole balance in one institution while chasing the top rate. Mind the KSh 500,000 KDIC ceiling.
• Locking money you will need. Breaking the deposit can wipe out the entire reason you opened it.
• Never re-reading CBK's monthly table. The bank paying best in June may not be paying best in December.

Frequently asked questions

Is interest on a fixed deposit taxed in Kenya? Yes. KRA applies withholding tax of 15% on bank interest, deducted by the bank before it pays you. For resident individuals this is a final tax on qualifying interest, so it is not taxed again in your annual return — though you should still file. Confirm the current rate and treatment with KRA if your circumstances are unusual.

What is the minimum amount to open a fixed deposit in Kenya? It depends entirely on the bank. Equity Bank's own product page states a minimum fixing amount of KSh 50,000 with a minimum period of one month. Minimums commonly range from around KSh 10,000 to KSh 100,000 across the market, but confirm the figure with the specific bank rather than relying on a comparison table.

Can I withdraw a fixed deposit before it matures? Usually yes, but at a cost. Depending on your contract you may forfeit accrued interest, receive a reduced rate, or pay a break fee. Some products explicitly permit premature withdrawal on softer terms. Read the clause before signing, and if there is any real chance you will need the money, ladder several smaller deposits instead of locking one large one.

Is a fixed deposit safer than a money market fund? They fail differently. A fixed deposit is a contractual claim on a CBK-licensed bank with KDIC cover to KSh 500,000 per depositor per institution. An MMF is a CMA-regulated collective investment with a variable yield, no KDIC cover, and daily-priced underlying assets. Neither is risk-free; the fixed deposit gives you rate certainty and a statutory safety net up to a limit, while the MMF gives you liquidity.

Should I choose a longer term to get a higher rate? Only if you are certain about the money and about the direction of rates. Longer terms usually pay more, but they also lock you out of rising rates and out of your own cash. With the Central Bank Rate at 8.75% and having trended down through 2025 and 2026, a very long lock is a bet that rates keep falling. Laddering is the more robust choice for most savers.

Where do I find the current rates myself? CBK's Commercial Banks Weighted Average Rates page publishes deposit, savings, lending and overdraft rates monthly, with a bank-by-bank breakdown. It is free, it is the regulator's own data, and it is the correct starting point before you speak to any bank. You can also see how account options stack up on our savings account comparison and bank account comparison.

Rates, tax rules and deposit-protection limits change. Figures in this article reflect CBK, KRA and KDIC publications as at 4 August 2026 — verify the current month's rates with CBK and your tax position with KRA before committing funds. Reviewed 4 August 2026.

This article is general information, not financial advice. It does not take your personal circumstances into account. Speak to a licensed financial adviser before making decisions about your money.