What Is The Meaning Of Cumulative Investment Certificate?

The duration of an investment certificate varies, starting from one year up to 10 years. There are three types of interest rates available - fixed, variable, and cumulative.

 A cumulative investment certificate is a medium or long-term certificate with optional durations of 3, 5, or 10 years. The difference between it versus other certificates is that rather than enjoying its benefits at the end of each year, you would do so at the end of the certificate’s duration.

Method of calculating cumulative interest:

• This interest is calculated by multiplying the annual fixed interest with the cumulative interest rate. For instance, if you obtain a 3-year cumulative certificate of 1000 EGP at an annual fixed interest of 10%, you will receive 1100 EGP in the first year, 1210 EGP the following year, and 1331 EGP the third year. The cumulative interest, in this case, would be 33.1%.

• However, if we compare it with a fixed interest rate, we will find that the fixed certificate consists of multiplying the annual fixed interest with the amount deposited over 100%. This means that if you obtain a 3-year fixed certificate of 1000 EGP at an interest of 10%, you will receive 1100 EGP in the first year, 1200 EGP the following year, and 1300 EGP in the third year, as long as you do not withdraw the interest that is given to you monthly, every 3 months or every 6 months. You also have the option of an annual interest, which would have to be agreed upon with the bank when opening your certificate. The interest would be maintained at 10% for the length of the certificate duration.

Minimum/Maximum Limits:

As with other certificates, the cumulative certificate has no maximum limit. However, in terms of a minimum limit, most banks approve it within a range of 500 EGP to 1000 EGP, with the exception of the National Bank, which approves it from 100 EGP. There have been instances where the amount has reached 5000 EGP in certain banks.

Certificate Features:

• There is more than one type of return offered by banks; monthly, quarterly, bi-annually, or annually

• You may use the certificate as a guarantee to apply for a credit card

• In certain banks, you may use the certificate as a guarantee to apply for loans

• The certificate may be broken after 6 months of its purchase, with a discount rate set by each bank

• Certain banks offer special benefits, such as the Housing and Development Bank, which gives cumulative certificate owners the right to choose a housing unit from one of their projects, provided that the purchased certificates represent about 50% of the unit’s value

Paperwork Required To Open A Certificate:

Current Customers

Each bank has different requirements; for some, if you are a current customer, you will need to fill out an application to open a certificate, whereas, in others, you may not need to do any extra paperwork at all.

New Customers:

• Photo of National ID
• Utility bill
• Form to open an account
• Request to open a certificate