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All parents want the very best for their children’s future. Probably the most important investments we can make for our children's future are a good education and financial support in buying residential property. However, time flies so quickly that in order to make sure all coming expenses are taken care of you need to start saving right away. Open a cumulative term deposit for your child, replenish it periodically and see how your child’s money grows year after year.
Start saving now!
Child cumulative term deposit can be opened by the child’s parents as well as by any third party.
Currency
Child cumulative term deposits are accepted in the following currencies: AMD, USD, EUR
Term and minimum amount
Deposit terms
- Minimum: 3 years
- Maximum: 25 years minus the age of the child for the whole term of the deposit, and maximum 18 years minus the age of the child for the deposit accumulation period¹
Deposit Minimum Amounts
- Minimum AMD 100,000 in case you save in AMD
- Minimum USD/EUR 500 in case you save in USD or EUR
¹ Cumulative term deposits opened in the name of the child are disposed by the child’s parents or legally assigned guardian until the child reaches the age of 18
Interest rate and maturity
Interest rate and calculation method
The interest rate for the cumulative term deposit is equal to the sum/difference of the Bank's base rate and the Bank's fixed margin.
Interest will be accrued on a daily basis and can be paid with the following options:
- Monthly or quarterly payment of accrued interest to the account specified by you
- Monthly or quarterly compounding of accrued interest to the term deposit (compounding of interest is available only during the deposit accumulating phase)
Interest paid for cumulative deposits is subject to income tax in accordance with RA legislation.
Important note
The current nominal interest rate of the cumulative term deposit can be changed by the Bank (which will result in change of the annual percentage yield) based on the change of the Bank’s base rate. In case of change of interest rate you will be notified at least 1 month prior to the change entering into force. In case of interest rate reduction you can terminate the deposit before the date of change entering into force and will receive the deposit amount and accrued interest in full. If the deposit is terminated after the changed interest rate enters into force interest calculation applicable for premature withdrawal of the deposit will be applied.
Maturity of your cumulative term deposit
You can choose the below two options for maturity of your cumulative term deposit:
One-off repayment- You can instruct the Bank to transfer all accumulated savings in a one-off repayment to an account designated by you
- You can instruct the bank to repay the accumulated savings in periodical (monthly or quarterly) installments for the duration of a term specified by you. If you choose this option, the same interest rate as applicable for cumulative term deposits at the time of repayments will be applied to the available balance on your deposit allowing you to earn interest also during the redemption period of your deposit.
Termination of the deposit
If the deposit is withdrawn within the first 12 months after the opening date, 1/100 portion of the accrued interest will be paid. In case if the deposit is withdrawn after 12 months but before the deposit maturity date, interest will be paid on pro-rated basis based on the following formula:
| PI = AI | AT |
| IT |
where:
PI - payable interest
AI - accrued interest
AT - actual term
IT - initial term
In case if interest has already been paid, interest amount will be recalculated and any applicable difference will be deducted from the deposit principal.
Example
Lets review an example. Your child is 1 year old and you decide to open a cumulative term deposit for your child with an initial deposit amount of AMD 100,000 for a term of 17 years and interest rate of 10.5%. If you save AMD 30,000 monthly and choose to compound the accrued interest on your term deposit, upon your child turning 18, his/her account balance will be equal to AMD 15,437,000 (assuming the above-stated initial conditions remain unchanged for the whole term of the deposit).
| Initial deposit | Monthly savings | Accumulated amount | ||
| Child is 5 year old | Child is 10 year old | Child is 18 year old | ||
| AMD 100,000 | AMD 30,000 | AMD 1,888,000 | AMD 5,312,000 | AMD 15,437,000 |
Learn how much you have already saved
You will receive monthly statements reflecting, among other information, your initial deposit amount, savings paid in to your deposit, total balance and interest paid.
Monthly statements delivered on the territory of Republic of Armenia as well as delivered through electronic means are provided free of charge. For other options for delivery of statements Bank may apply charges in accordance with the Bank’s tariff of charges.
Interest Rates
Cumulative Term Deposits Nominal Interest Rates
| Currency | Minimum Initial Deposit | Bank Base Rate (BR) | 12 – 36 months | 37 – 60 months | 61 – 120 months | 121 – 240 months | 241 – 360 months | more than 360 months |
| AMD | 100,000 | 10.5%* | BR - 1% | BR - 0.5% | BR - 0.25% | BR - 0% | BR + 0.25% | BR + 0.5% |
| 9.50% | 10% | 10.25% | 10.5% | 10.75% | 11% | |||
| USD | 500 | 8.75%** | BR - 4.75% | BR - 3.75% | BR - 2.75% | BR - 2.25% | BR - 2% | BR - 1.75% |
| 4% | 5% | 6% | 6.5% | 6.75% | 7% | |||
| EUR | 500 | 7.00%*** | BR - 6% | BR - 5% | BR - 4% | BR - 3.5% | BR - 3.25% | BR - 3% |
| 1% | 2% | 3% | 3.5% | 3.75% | 4% |
* effective from 01/05/2009
** effective from 10/11/2008
*** effective from 22/05/2009
Cumulative Term Deposits Annual Percentage Yield
| Currency | Interest amount payment / compounding periodicity | Deposit Total Term | |||||
| 12 – 36 months | 37 – 60 months | 61 – 120 months | 121 – 240 months | 241 – 360 months | more than 360 months | ||
| AMD | Monthly | 9.92% | 10.46% | 10.74% | 11.01% | 11.29% | 11.56% |
| Quarterly | 9.84% | 10.37% | 10.65% | 10.91% | 11.18% | 11.45% | |
| USD | Monthly | 4.07% | 5.11% | 6.16% | 6.69% | 6.96% | 7.22% |
| Quarterly | 4.06% | 5.09% | 6.13% | 6.66% | 6.92% | 7.18% | |
| EUR | Monthly | 1.0% | 2.02% | 3.04% | 3.55% | 3.81% | 4.07% |
| Quarterly | 1.0% | 2.01% | 3.03% | 3.54% | 3.80% | 4.06% | |
Interest on the cumulative deposits is calculated based on the nominal interest rate. The Annual Percentage Yield shows how much income you would receive if you reinvest the interest received into deposit.
Interest income received from cumulative deposit is subject to taxation in accordance with RA legislation.
The interests on the amounts available on your account are being calculated based on the nominal rate, and the annual percentage yield indicates what would be your income in case the interests of your time deposit are reinvested in a new time deposit. The annual percentage yield is being calculated based on the formula below:
where:
- A – is the initial deposit amount.
- n – is the consecutive number of the time deposit related monetary flows.
- N – is the last number of the time deposit related monetary flows (including the monetary flow at the moment the time deposit started), after which the time deposit agreement term is being considered as expired.
- Kn – the flows of the time deposit invested at the moment of time deposit opening and/or during the operation of it, as well as the flows of the capitalized interests, and, if available, of the mandatory fees.
- Dn – is the number that indicates how many days are passed from the moment the time deposit has been opened till the time deposit related monetary flows are being done, including the consecutive n-th one. In case the monetary flows are at the moment of time deposit opening, D1 = 0.
Ways to save
After you open the cumulative term deposit in your child’s name, funds may continue to be deposited into the account at any time either by yourself or any third parties.
To replenish cumulative term deposit you can:
- Set regular payments by giving instruction to the bank
- Deposit any amount at any time
- Stop replenishing your account, or take a payment holiday and restart later if circumstances change
You can transfer funds to the cumulative deposit via the following channels:
- ATM network: more than 50 ATMs at over 40 locations in Yerevan where you can effect your transfers
- Telephone Banking: call us at (+37410) 515 000 7 days a week and ask our Call Centre agents (if registered for Telephone Banking service)
- Internet Banking: make your transfers 24/7 via HSBC Personal Internet Banking services from anywhere in the world and any time during the day, at no additional cost
- Branch network: you may visit any of our 7 branches to make your payment transactions in cash or via transfer
Important Information
Cumulative deposit account is opened free of charge and is not subject to any service charges for the whole duration of the deposit term.
Your deposit is guaranteed by the Deposit Guarantee Fund in accordance with the RA Law on Guarantee of Compensation for the Banking Deposits of Physical Persons. The law stipulates the below limits for deposit guarantees:
- If you have a deposit only in AMD within the same bank: AMD4mln
- If you have a deposit only in foreign currency within the same bank: AMD2mln
- If you have deposits both in AMD and in foreign currency within the same bank and if the deposit in AMD is more than AMD2mln: AMD4mln (only the deposit in AMD is guaranteed)
- If you have deposits both in AMD and in foreign currency within the same bank and if the deposit in AMD is less than AMD2mln: AMD2mln (the deposit in AMD is fully guaranteed and deposit in foreign currency is guaranteed in the amount of the difference between AMD2mln and the guaranteed deposit in AMD)
Dispute settlement
The disputes or disagreements arising from the cumulative term deposit agreement are settled in accordance with the RA legislation.
If the property claim related to a dispute does not exceed AMD ten million or its equivalent in other currency, the dispute can be settled through the Financial System Mediator
The Bank has waived its right to appeal the decisions of the Financial System Mediator, if the property claim requested by you does not exceed AMD 250,000 (two hundred and fifty thousand) or its equivalent in other currency and the amount of the transaction does not exceed AMD 500,000 (five hundred thousand) or its equivalent in other currency.
