If you have savings and want an immediate cash sum while keeping your money invested for a set period, upfront-return certificates may be worth considering. They let customers receive the return for the certificate's entire tenor in advance, instead of waiting for monthly, quarterly or annual payouts.

These certificates differ from conventional ones in the timing of the payout, so looking at the advertised rate alone is not enough. You should also consider the certificate's tenor, the amount of return you receive upfront, the early redemption terms, and how much liquidity you may need during the investment period.

Best upfront-return certificate at banks

A Banky survey of savings certificates available on the Egyptian banking market found that The United Bank's 3-year upfront-return certificate offers the highest upfront return among the certificates surveyed, at up to 40% of the certificate's value for the full 3-year investment period. This gives customers immediate cash from the start of the investment, while their principal stays with the bank for the certificate's entire tenor.

The United Bank 3-year upfront-return certificate

The United Bank offers a 3-year upfront-return certificate that gives customers a 40% return in advance for the certificate's full 3-year tenor, credited to the customer's account on the business day after the certificate is opened.

Details of The United Bank 3-year upfront-return certificate

  • Return: 40% upfront for the certificate's entire tenor.

  • Tenor: 3 years.

  • Minimum purchase: EGP 5,000.

  • Denomination: multiples of EGP 1,000.

  • Payout frequency: upfront, on the business day after the certificate is opened.

Features of The United Bank 3-year upfront-return certificate

  • Currency: Egyptian pound (EGP).

  • Eligibility: individuals only.

  • Redemption: the certificate can be redeemed after 6 months from purchase, according to the bank's approved redemption schedule.

  • Borrowing: loans can be taken against the certificate in line with the bank's credit policy.

How do you calculate what you'll get from the certificate?

If a customer opens the certificate with the minimum of EGP 5,000, the 40% upfront return comes to EGP 2000, paid on the business day after the certificate is opened.

If you save EGP 100,000, how much do you get upfront?

Investing EGP 100,000 brings an upfront return of EGP 40,000, while the total amount invested remains EGP 100,000 and the certificate stays in place for 3 years under its terms.

Banky's view:

The United Bank's 3-year upfront-return certificate stands out by providing immediate cash from the return without waiting for periodic payout dates. This may suit customers who have savings and want a cash sum at the start of the investment period to cover certain commitments or financial needs.

However, it is important to note that the 40% is the total return for 3 years, not an annual rate. The customer also ties up the principal for the certificate's tenor and cannot redeem it before 6 months, according to the redemption schedule. The certificate's suitability therefore depends on whether the customer can do without the invested amount for the investment period, and how much they benefit from receiving the return upfront.

Key tips before buying upfront-return certificates

1- What is an upfront-return certificate?

It is a savings certificate in which the customer receives the total return due for the certificate's tenor in advance, instead of in monthly, quarterly or annual payouts, while the principal remains tied up until the end of the tenor.

2- Is the upfront return an annual rate?

Not necessarily. The advertised rate may cover the certificate's entire tenor, as with The United Bank certificate, which offers a 40% return for 3 years. So make sure whether the rate is annual or total before you buy.

3- Can I redeem the certificate at any time?

Not always. Each certificate has its own early redemption terms, and banks may only allow redemption after a certain period from the purchase date, with deductions applied according to the redemption schedule.

4- Can I invest the return I received upfront?

Yes. The customer can use the upfront return to meet their needs or reinvest it in another savings product, but should calculate the expected return on the new investment and make sure it fits their financial goals.

5- Does receiving the return upfront mean I can withdraw the principal?

No. The upfront payout is separate from the certificate's principal, and the invested amount stays tied up with the bank for the certificate's entire tenor, with redemption possible under the published terms.