A Fixed Deposit (FD) locks your money in a bank for a set period (30 days to 5 years) in exchange for a higher interest rate than a regular savings account. An MMF is a professionally managed pool that holds similar short-term instruments but stays liquid.
Yield
As of February 2026, Kenyan bank FD rates average around 8-10% gross for 12-month tenors at large banks, and up to 13% at smaller tier-2 banks chasing deposits. Top MMFs yield 9-11% net after the 15% withholding tax. Net of tax, the best MMFs typically edge out FDs at every major bank.
Liquidity
- FD: your money is locked. Early withdrawal forfeits most of the interest (usually you fall back to savings rate).
- MMF: redeem any business day, funds settle in 2-4 days. No penalty.
Safety
- FD: covered by the Kenya Deposit Insurance Corporation up to KES 500,000 per depositor per bank.
- MMF: not insured, but regulated by CMA with custodian separation. Historical Kenyan MMF defaults are extremely rare.
Verdict
For most Kenyans with savings under KES 500,000 who may need the money within a year, an MMF wins on yield and liquidity with only marginally higher risk. Use an FD only if you are confident you won't need the money and you find an above-market tier-2 bank rate.