Treasury Bills vs Savings Accounts — A Practical Comparison
Two ways to hold money you are not spending yet. They differ on return, on access, on who owes you the money, and on tax. Here is how to compare them properly, and the situations where each is the sensible choice.
Head of Fixed Income Research · · 3 min read
Illustrative sample. This article was written to demonstrate FlowWealth’s publication format and is not a published research view. Figures are illustrative and must not be relied upon for any decision.
Most Ghanaians with money set aside face this choice, and most resolve it by default — the money stays in the bank because that is where it already is.
It is worth making the comparison deliberately at least once, because the two options differ on more dimensions than the rate.
What each one actually is#
A savings account is a deposit with a commercial bank. The bank owes you the money. It uses your deposit to fund its lending, and pays you a share of what it earns.
A Treasury bill is a short-term loan to the Government of Ghana, bought through a bank or broker at auction, in tenors of 91, 182 or 364 days. The government owes you the money and repays the face value at maturity.
The four dimensions that matter#
Return. Treasury bills have generally paid more than savings accounts in Ghana, and the gap has often been wide. The reason is competitive rather than mysterious: the government must attract funds at auction, while banks face less pressure to compete for retail deposits.
Access. A savings account gives you your money on demand. A Treasury bill locks it up until maturity. You can sell before maturity in the secondary market, but the price is not guaranteed and, for retail holders, the process is not always straightforward.
Who owes you. A bank deposit is a claim on a bank; a Treasury bill is a claim on the government. Both carry risk. Ghana's 2022–23 domestic debt exchange is a reminder that government paper is not risk-free either, and that reminder is worth keeping.
Tax. Withholding tax treatment differs between instruments and can change. The relevant comparison is what reaches your account, not the gross rate.
When each makes sense#
A savings account makes sense for your emergency fund, for money you might need at short notice, and for anything where the certainty of immediate access is worth more than the extra return.
A Treasury bill makes sense for money with a known date attached — school fees due in six months, a payment scheduled next year — where you can match the tenor to the timing and do not need access in between.
Many people should hold both, and the split is determined by liquidity needs rather than by which rate is higher.
The mistake to avoid#
The most common error is putting money into a 364-day bill and then discovering it is needed in month four. Selling early in Ghana's secondary market is not reliably straightforward for retail holders, and the price you receive may be worse than expected.
The tenor should follow the timing of your need. It is not a decision about maximising the rate.
Sources
- Bank of Ghana, Treasury bill auction results and commercial bank interest rate data
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