How to make money with savings certificates

Crédito Habitação Activo Bank

With the increase in the Euribor, mortgage repayments increased, but on the other hand, the return on savings certificates increased. In the Savings accounts report, I explained how you can make money with your money by taking advantage of the crisis. For those who do not like to risk their money, they are currently the best option to earn money from their savings.

How savings certificates work

For years, the Savings Bonds yielded almost nothing. From one moment to the next, with the sudden rise of the Euribor, they became the best savings product with guaranteed capital that currently exists in Portugal. It is a great opportunity for Portuguese who are afraid of losing money in variable income investments. At the moment they are already better than Treasury bills.

The formula is simple: the more the Euribor rises, the more the Savings Bonds yield, with the advantage that interest is accrued on interest.

Certificates are a state savings product. They are registered at the post office counters and you only lose money if the country goes bankrupt, which is a completely unlikely scenario. To subscribe to it, you must first personally open a savings account (it’s not a bank account, so you can keep your minimum bank service account if you have one) at a CTT branch (not Banco CTT, OK?).

The interest is calculated every 3 months on the basis of the average value of the 3-month Euribor determined for the relevant month + 1%. They can never drop from zero and stop when they reach 3.5%. At that amount, the base rate stops, even if the Euribor rises further. At the time of writing this report, that amount was already approximately 2.5% gross.

In addition to the maximum of 3.5%, there is also a permanent premium of 0.5% or 1%, depending on the years that you have the money there. Therefore, in the best possible scenario, your savings in recent years can amount to 4.5% (maximum is 10 years).

Dozens of times better than time deposits

Let’s compare it with the values ​​applied to term deposits at the largest banks in Portugal. According to data collected by DECO:

  • At Millennium BCP, a 12-month down payment yields 0.25% gross
  • At Novo Banco, 0.07%
  • At Montepio 0.04
  • At Caixa Geral de Depósitos 0.015
  • At Santander 0.01
  • and in the BPI it is really absolutely zero.

The three-monthly base rate is the average of the Euribor 3 months of the last 10 working days of the previous month + 1% plus the permanent premiums if you are already entitled to them. Permanent premiums are 0.5% between the second and fifth years, and after 5 years at the maximum basic rate of 3.5%, another 1% is added. That is, it is a product that can yield 4.5% gross interest in the future. There is no equal in Portugal with guaranteed capital.

The return on your savings varies every 3 months, depending on the evolution of the Euribor 3 months. It is not the initial “forever” subscription fee for the next 10 years.

Just take a look at this chart to understand why Savings Bonds are back in fashion. After several years of almost zero yield, yields have increased very rapidly since March 2022.

Since that month, the amounts invested in Savings Bonds have risen successively. In September alone, more than 700 million euros worth of Savings Certificates were subscribed.

If the 3-month Euribor falls again in a few years, you should reassess whether you have better products in the competition and trade them in to reinvest in another financial tool if you do the math and compensate.

Letting the money stop in the checking account now is not. This is losing (a lot of) money without any necessity.

Attention to one detail. The rules for postal savings certificates can change at any time. Every time a State product starts to yield a lot, the conditions are reduced without notice for new subscriptions. It has happened several times in the past. It may be to take this opportunity.

The terms and conditions of the Savings Bonds

Let’s go to the terms of the product:

  • The minimum to register is 100 euros
  • The opening of the Savings Account must be done in a CTT branch and then you can do everything online on the page.
  • You can redeem your money after 3 months.
  • You always pay 28% tax on capital gains withheld at source. You don’t have to declare anything to the tax authorities unless you want to withdraw it.

In short, if you are only interested in financial products with guaranteed capital, Savings Certificates are the best opportunity you currently have. And if you keep in mind that you won’t be able to use that money for the first 3 months, you can also consider putting your Emergency Fund here, although I always say that you should always have that money available on demand. Remember that although the money is available quickly, it always takes a few days. evaluate.

It’s a good opportunity to grab before the government decides to change the rules again.

You can view or watch the video report through this link on the SIC Notícias page:

PODCAST | #117 – Are Savings Bonds a good savings product again?

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