Are Savings Certificates a good option again?

Are Savings Certificates a good option again?


Yup. The answer is yes. All crises have a bad side and a good side. If, on the one hand, the rise in Euribor harms those who have a home loan because it increases the mortgage payment, on the other is good for those who have savings linked to Euribor. This is the case of Savings Certificates.

For a long time, I shared with you that – in my opinion – the best investment product with guaranteed capital was Treasury Certificates. Now, there has been a turnaround.

Savings Certificates gain new life

Savings and Treasury Certificates are a way for us, citizens, to lend money to the State and receive interest for it. They can be subscribed at CTT counters, on the IGCP website or at the Citizen’s Spaces. The capital is guaranteed by the State itself, that is, you just don’t get your money in the end if Portugal, as a country, goes bankrupt.

Savings Certificates are a product known for decades by most Portuguese people. They’ve already made a lot of money and then stopped making them.

With the rise of the Euribor to 3 months, the Savings Certificates are getting a new lease of life. It all depends on the value of the 3-month Euribor and for how long.

In series E – at the time of writing – the interest rate is calculated monthly based on Euribor 3 months + 1%. The Savings Certificates of this series are limited by law: can never yield less than zero no more than 3.5% + premiums (ie 4.5%).

The maximum term is 10 years and the minimum you can subscribe is 100 euros (Treasury Certificates have a minimum of 1,000 euros). You Interest accrues every 3 months and is capitalizedthat is, they accumulate with the value that is there and thus the interest in the following quarter will be calculated on a higher value than in the previous one (in the case of Treasury Certificates, the interest goes to the current account and is not capitalized).

You cannot redeem all or part of the amount you subscribed in the first 3 months.

Also read: Money sitting in the bank? Savings certificates already yield more than 1%

The “magic” of compound interest

In the last 7 years (until 2022) the yield from Savings Certificates was very low because from the fixed 1% it was necessary to subtract the negative Euribor. As the 3-month Euribor rate was around -0.5 for a long time, the return was 0.5% gross.

Currently, with the 3-month rate already above 1%, already has a 2% yield with guaranteed capital. To this value must be added the permanence premiums that are added to the base rate from the 2nd year onwards.

After all, if the 3-month Euribor remains at least at 1%, from the second year onwards it will have a “guaranteed” yield of 2.5% and from the fifth year onwards it increases to 3%which is very good compared to term deposits.

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. And the Compound interest “magic”. Your money will multiply much faster. It is one of the very few financial products in Portugal – if not the only one – that still capitalize interest. It might be of use. Do your math.

Also read: Compound interest: how to take advantage of this investment multiplier

Pedro Andersson

Pedro Andersson was born in 1973 and fell in love with journalism as a teenager, at Rádio Clube da Covilhã. He graduated in Social Communication at the University of Beira Interior and began his professional career at TSF. In 2000, he was invited to be one of the founding journalists of SIC Notícias. Currently, he continues at SIC, as a coordinating journalist, and since 2011 he has been responsible for the “Savings Accounts” section, dedicated to personal finance. He tries to bring the reality of everyday life to the reports he makes.

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