Move your cash NOW if you want to stop it being WHITTLED away
If your precious savings are languishing in a deposit account, you’re losing out, so take advantage of recent interest rate hikes and…
Irish savers are now losing out to the tune of up to €6bn a year – literally up to tens of thousands each – by accepting derisory interest even as rates go through the roof. This week the European Central Bank hiked its rates for the tenth time by a total of 4.75% – following hot on the heels of a quadrupling of some interest rates by An Post.
Yet 93% of Irish savings were held ‘on demand’ making the tiniest fraction of those rates at the last count.
We are some of the very best savers in Europe, stashing away €151bn – or approaching €40,000 on deposit for every adult in the country.
‘Among the 12 EU countries for which there was data available in 2022, Ireland had highest savings per capita,’ declared Statista.com (though ultra-rich Luxembourg was not included in that assessment due to its out-of-date data).
But we are also probably the least savvy. Incredibly almost all of that money is in the least lucrative type of account (on demand) earning a pitiful 0.03% interest at the last count (March).
Why do so many savers insist on having instant access to their money? Are they chronically insecure about their finances despite having more wealth stashed away per person than almost any other country?
Even then we still allow the banks to rip us off mercilessly with their derisory rates.
The average European gets five times more ‘on demand’ in the eurozone – and twice as much for other types of deposits.
If only we moved our money to the best-paying deposit accounts in Europe (and we easily can via Raisin.ie), we could earn 4.2% over just one year – around €6bn more than we do (less tax).
Or we could get €3bn more tax free just by sticking it in the post office after it recently raised its rates to 2% for long-term deposits.
As we revealed in August, Irish banks are absolutely coining it with massive increases in the profits they make off savers’ backs on deposit accounts.
So get your money out of a demand deposit account ASAP… and shop around.
It’s not that hard. It’s not rocket science and nowhere near as risky or complicated as investments.
There is even less excuse to do nothing after the Irish savings market got the jolt it badly needs recently as An Post finally hiked its deposit rates.
One product (three-year savings certs) even quadrupled its total interest rate from 1% to 4%.
Such increases are long overdue after the ECB hiked rates umpteen times since July 2022.
Inflation is also rampant at around 5%. So your money will still lose probably lose value at least in the short term. But it will lose a heck of a lot more if you don’t get it out of demand deposit accounts!
So what should savers do?
Pay off your mortgage early if the terms of your contract allow it. With mortgage rates at over 4%, this is a tax-free return you won’t get from any bank across the eurozone.
Check out Raisin.ie for the best EU interest rates – now up to 4.2%.
Switch to a longer term account that at least will pay something.
If you are liable to pay tax, An Post tax-free products generally beat Irish banks over the long term, although PTSB’s 2% over three years does match the equivalent post office rate (see table). With An Post, however, you can still access your money and even get some interest if you cash in early.
Keep an eye out for further increases in bank deposit rates as this latest move should trigger them into long overdue action.
If you are not liable to DIRT tax, the very best bank deposit accounts
can be more competitive over the medium term compared to An Post.
A regular savings account pays up to 2% with major banks, albeit on smaller sums.
Consider investing your money if you want to beat inflation. However, this is risky and you need advice.
Another (risky) option is investing in your business or side-hustle to make money. You may lose it but at least you’ll have tried to ‘live your dream’.
You can also lend out money to other businesses through peer-to-peer lending platforms like Linked Finance, although this should be considered very carefully and is losing appeal as interest rates on deposits finally go up.