Savings and Credit Cooperatives vs Banks: Where Is Your Money Better Off?

savings and credit cooperatives vs banks

Want to save up money or get a loan in Kenya? Basically, your only options are banks and Savings and Credit Cooperatives (aka SACCOs). The latter is a sort of a credit union. They both offer features such as saving and loans, but the experience is very different.

Banks have been there for ages. Savings and credit cooperatives are relatively new on the market of finance. But old doesn’t always mean good. We’ll tell you the basic differences between banks and SACCOS in Kenya to help you find the best place for your money.

The main difference lies in ownership

Surprised? Banks and Saccos have different forms of ownership. Believe, it’s a big deal because it greatly defines how your money feels there. People who stand behind banks are the investor(s). They put their money in the venture and logically expect very high returns. They make a profit at your expense. This explains draconian interest rates on bank loans.

A SACCO exists “not for profit”, but for the support and satisfaction of people who hold its shares. Registered SACCOs in Kenya give their members access to better deals in form of a higher interest rate on savings and lower – on loans.


The greatest thing about banks is that their loans are always available. Although you might need collateral to borrow larger amounts. Other pleasant features are a dense net of ATMs and mobile banking with a transfer feature.

Things to keep in mind when dealing with a bank

  • Notorious high-interest rates that can go higher during the loan’s lifespan.
  • Interest rates on savings are very low.
  • Except for interest rates, banks make money on various fees they withdraw from your account. Be ready to pay insurance fees, minimal amount fees, accrued interest fees, processing fees, account maintenance fees and so on. With some banks, you even have to pay for paying your loan off early. They call this ridiculous fee “early repayment charge”.
  • Finding a no-fee savings account can be hard. You can look for one at online-only banks.

Due to the rate capping, banks rates in Kenya now are at a maximum of 15%. Banks give out loans very reluctantly as they find unsecured lending very risky. This option is saved for mobile banking loans, which aren’t interest capped. Such situation forces many individuals and SMEs to run for other expensive money lenders.

If you still decide to get backed up with a bank, ensure you choose a reliable institution. Beware of banks that heavily rely on customer’s deposits.


Savings and credit cooperative societies exist to serve their members, not to build up profit. In Kenya, SACCOs emerged a few decades ago to fill the gap of financial services in small towns. Now they are threatening major commercial banks with their higher member satisfaction rate.

Advantages of SACCOs over banks

  • Your savings attract a high-interest rate. At MOMBO SACCO, your annual percentage yield is 6%. It means that you get 6% of your savings as interest every year. You can either withdraw them twice a year or leave them on your savings account.
  • Members can get loans at a steady interest rate as low as 12%. You can have a peace of mind that the rate won’t grow with the lapse of time. For comparison, local banks almost never offer loans at a total cost of credit lower than 20%. Usually, their offer is double the SACCO’s rate.
  • At MOMBO SACCO, you can get a loan that is 5 times bigger than your savings.
  • Your high interest rate on savings compensates the interest rate you pay on a loan. To make this happen at a bank, you need to hold a very big amount of its shares.
  • While repaying a loan, you keep building up your savings account. With the draconian rates of banks, it is psychologically impossible.
  • You can borrow money even after you give up employment. A bank would require collateral (assets) in such case.
  • As a member, you can control your Sacco by attending meetings and electing officials accountable to you.
  • Unlike banks, SACCOs in Kenya trade their shares at affordable prices. For example, the MOMBO’s share costs only KES 100. Your risk is minimal because your liability as a member is equal to the amount of your shares.
  • Unlike other SACCOS, MOMBO SACCO uniquely offers 2 streams of revenue. Except for 6% interest on savings, a member gets dividends on shares as well.

To find the best place for your money, ensure you do your research and compare terms at both registered SACCOs in Kenya and banks. Open a savings account with the society that values your input. The money you earned with a dedicated work is worth a dedicated treatment.

Saving 101: A Little Saving Goes a Long Way


Haba na haba hujaza kibaba is a Swahili saying which loosely translates to little by little fills the measure. With Nairobi being ranked as the fourth most expensive city in Africa, Kenyans are always on the lookout for bargains and ways to stretch the shilling. Below are some tips to keep your spending in check and ensure you are saving up your coins.


1.Banking tips

A report by Financial Sector Deepening (FSD) in 2017 estimated the lowest cost to owning a bank account in Kenya to be around Kshs 6,436 per year . This is the average cost for withdrawals, transfers and account maintenance fees. How do you make sure that these costs do not go higher?

  • Plan withdrawals– Banks charge different withdrawal fees while some accounts come with a fixed number of free withdrawals per month. Make sure to find out also from your bank the charges of withdrawing from your bank’s ATM vs. another banks ATM. The difference could be much as from Kshs 30 to Kshs 200.
  • Separate your paycheck– (savings vs. current accounts). You can withdraw from a current account anytime whereas a savings account accrues interest and has limited withdrawals. You can approach your Human Resources Officer to divide your paycheck into these two accounts or have a standing order with your bank where at a specific time of the month, money is transferred from your current to savings account.
  • Low interest loans– The growth of the fintech industry in Kenya has led to the growth of many array of loans one can have access to. There are traditional banking institutions, Sacco’s, mobile money loans apps such as Branch, Tala and Mombo. A quick Google search will present you with tons of quick and unsecured loan options. Be sure to check the reviews of such apps/sites as well as their interest rates as the devil lies in the details.


2. Shopping tips

  • Wholesale shopping– Opting for this option saves you money per unit price of items.
  • Deals/discount sites– Be on the lookout for holiday sales such as Black Friday which has caught on especially with e-commerce players such as Jumia. There are also many sales in clothing and electronic stores during the Easter and Christmas period. Buying advance tickets to events on sites such as TicketSasa will always cost you less in comparison to buying them at the gate. Restaurants also run BOGOF( buy one get one free) offers on different days of the week such as Pizza Inn on Fridays.
  • Reward cards/Coupons– Be sure to take advantage of the loyalty cards offered by the various stores especially supermarkets where you accumulate points after every purchase. You are then able to redeem such points in store which goes a long way in achieving your saving goals. Most online retailers also provide coupon codes on their social media or on newsletter for their subscribers.
  • Do It Yourself (DIY)- You can save a lot of money but requires a lot of time input. The internet has infinite ideas on DIY that can be easily executed after a visit to your local hardware store for materials or also using easily available materials in your homes.


3. Expense tracking and budgeting tips

It is paramount to know your spending habits in order to have a clear picture on where you can cut your spending. There are many apps available that can help one track budgeted expenses vs. actual spending plus investments if any.  You can also create a personal expense tracking spreadsheet that can contain spending categories with set limits which gives you visual output whenever you go over budget. Most paid apps export also export their reports to Excel.


4. Alternative income tips

Are you pushed to the wall and have barely zero savings despite the above tips? You should consider diversifying your income streams. Have you invested in any stocks or bonds?  Do you know any no fee investment funds in Kenya such as one offered by  Mombo App?  Do you have any skills that you could use to do freelance projects? The earnings from such gigs could go into your high interest savings account which will slowly but surely increase the money at your disposal.