You Savings Certificates are a capitalization financial product. Therefore, they are a good alternative for those who want to save. They are also public debt securities, which means that, by buying them, you are lending money to the State.
They are a good savings alternative for those who want to save without taking risks and, with the recent change in the European Central Bank’s monetary policy, resorting to this savings solution is already paying off. According to the IGCP🇧🇷 in November 2022, the gross interest rate for new subscriptions and capitalization of Certificates of Savings, Series E, was set at 2.492%🇧🇷
It is recalled that Savings Certificates are reacting to increases in the reference interest rate, in particular the 3-month Euribor.
Savings Certificates: How do they work?
In addition to being instruments that the State has to finance itself directly with families, Savings Certificates have another objective: encourage savings in families🇧🇷 Therefore, they are financial instruments that are easily accessible to all and have low minimum subscription amounts.
- Interest calculated every 3 months and added to your savings;
- Minimum investment of €100 and maximum of €250,000;
- Easy to subscribe, easy to redeem;
- Subscription and withdrawal without any charges;
- Stay premiums up to 1%.
How is interest calculated?
Savings Certificates are capitalized on a quarterly basis. That is, every month, holders of Savings Certificates receive interest that are successively applied and added to the capital to earn more interest. This process is called capitalization.
This type of interest increases the total investment more than simple interest and the longer the term of the investment, the greater the return you can obtain on this product.
The interest rate depends on the series
This savings product is issued through Series. Currently on sale at E series🇧🇷
The interest rate applied is determined monthly on the third-to-last business day of the month, to be in effect during the following month, according to the following formula: E3+1%, where E3 corresponds to the average of the three-month Euribor values observed in the previous ten working days. The result is rounded to the third decimal place. It cannot be more than 3.5% nor less than 0%.
In addition to the interest rate, a permanence premium is applied depending on the time you have this application.
The permanence premium is added to the base rate from the 2nd year onwards.
- From the beginning of the 2nd year to the end of the 5th year, 0.5% is added to the base rate.
- From the beginning of the 6th year to the end of the 10th year, 1.0% is added to the base rate.
Interest is automatically compounded every 3 months🇧🇷
At the end of each quarter, the interest you are entitled to is automatically added to your savings, so that you earn more in the next quarter. Therefore, to avoid losing money, always wait for the end of each quarter so as not to lose the interest accumulated in that period. The ideal will always be to wait for the deadline associated with Savings Certificates, currently 10 years.
What are the deadlines and what is the minimum investment?
As mentioned earlier, the minimum period of stay is 3 months and the maximum period is 10 years🇧🇷 As for the amount needed to invest in this product, you will only need €100. The maximum investment you can make will be €250,000.
How to subscribe Savings Certificates?
Savings Certificates can be subscribed in two ways: in person or electronically.
You can subscribe to Savings Certificates in person at any CTT station🇧🇷 Here, you can open a savings account at IGCP, to which you can associate your Certificate and your bank account, to which redemptions or payments will be made when the Certificate expires. To open this savings account, you will need the following documents:
- Completed account opening form (Model 701🇧🇷
- Citizen Card;
- Proof of IBAN;
- Proof of address;
- Proof of profession and employer.
You can also choose to do so electronically in AforroNet, where you can also consult your statement, give subscription and redemption orders for some savings products. All without leaving home.
What costs will you have to bear?
has no costs, nor purchase, maintenance or sale. This is one of the factors in which they outperform other savings instruments, such as bonds that have various associated fees, including a safekeeping fee that you will have to pay periodically to your bank.
And the tax costs?
The tax rate is the same as that applied to capital income. Corresponds to 28% of quarterly earnings. The tax is automatically applied, which means that what you receive is already tax-free and you do not need to include the Savings Certificates on your income tax return. You will only have to do this if you opt for aggregation and your tax rate is less than 28%.
How is the redemption processed?
Like subscriptions, redemptions can be made at CTT stores or on the AforroNet portal. You can redeem the entire amount invested in Savings Certificates or only partially. However, you can only do so after the first interest payment, ie at the end of three months. If there is no early redemption, repayment of principal and capitalized interest takes place 10 years after subscription.
However, attention, redemptions of A, B, C and D series Savings Certificates in cash can only be carried out by the savings account holder, and up to a maximum limit of €3,000 per savings account per day.
Finally, we just want to give you a tip: if you have to withdraw the money you invested in Savings Certificates, choose to ask for the refund of the most recent, (excluding those issued in the last 3 months, which cannot be moved yet). This is because by redeeming the most recent ones, you guarantee that the total of your investment in Savings Certificates will be profitable to the highest possible ratesthus maximizing your earnings.
Advantages: why should you invest in Certificates of Savings?
One of their main advantages and reasons for subscribing is the security they offer. You are guaranteed the total capital invested and the income obtained. After all, it corresponds to the public debt issued and guaranteed by the Portuguese State and it is not expected that the State will go bankrupt.
If you want to sell your Savings Certificates and recover the capital invested, you have this guarantee too. You will only have to wait 3 months after subscribing. After this first quarter, you have the possibility and ease of always being able to redeem your money. For example, if unforeseen circumstances arise, you will have a financial cushion available.
Low subscription amount and exemption from costs and commissions
Savings Certificates can be subscribed with just 100 euros. Furthermore are totally free of costs or commissions🇧🇷 The cost exemption applies either to the purchase, during the period in which the Savings Certificates are kept, or to the early redemption or maturity.
With all these facilities, there are few excuses for not putting your savings and money working for you.