Irish savers missing out on up to €3.5 billion in interest a year
New research from price comparison website Bonkers.ie shows that Irish savers are collectively missing out on up to €3.5 billion in interest a year as they are slow to put their money into higher yielding savings accounts.
Daragh Cassidy, Head of Communications at Bonkers.ie, is encouraging more Irish savers to move their money into higher yielding savings accounts to benefit from the higher rates of interest that are now available.
New figures from the European Central Bank show that the average interest rate on a savings account with a fixed maturity in Ireland, or an account where savings are locked away for a specified time, was 2.59% in October.
While this is the sixth lowest in the euro zone, the rate has risen steadily in recent months.
But the interest rate on overnight deposit accounts, which includes current accounts and demand deposit accounts where people have almost instant access to their money, is much lower at just 0.12%.
Irish households have just over €141 billion in these accounts, according to data from the Central Bank for October. This means Irish savers are collectively missing out on up to almost €3.5 billion in interest a year.
“Irish households have over €153 billion resting on deposit right now. And the vast majority of this is still earning little to no interest. This is despite rates of up to 3% now being available from the main banks in Ireland,” Daragh Cassidy said.
“While rates of over 4% are on offer from European banks, some of which can be easily accessed by Irish savers through savings platforms like Raisin. Trade Republic, a German digital investment platform, offers its customers in Ireland 4% interest on any uninvested money,” he noted.
But he said that for some reason, Irish people have been slow at moving their money into the best yielding savings accounts.
“Perhaps they don’t realise the rates that are now on offer. Or perhaps they think they’re getting the higher rates already. Or maybe they think their bank is going to do it for them. Either way people are missing out and I’d encourage everyone to make it one of their New Year’s resolutions to check out the best savings accounts for their money,” he added.
Mr Cassidy said that if someone had €20,000 in savings, they would receive almost €1,900 in interest before tax if they put it into PTSB’s three-year fixed account that pays 3% AER. They would get almost €2,500 in interest if they invested through Raisin and got 4% AER.
“By contrast, if they kept their money in an easy-access demand deposit account or their current account, and were getting the average rate of 0.12%, they’d receive only around €72 in interest before tax after the three years. It’s a huge difference,” he added.