CHARLIE WESTON PERSONAL FINANCE EDITOR
THE savings rates paid by banks has been slashed in the past year, a new report seen by the Irish Independent shows.
The interest rate paid by banks has been chopped by 40pc since this time last year as banks cut what they pay for funds from households.
New figures from price comparison site Bonkers.ie show that the best rate for savings put away for 12 months was 4.75pc this time last year.
Now the best rate for a saver in the market is 2.8pc, a fall of 40pc in a year. This is for money left in a savings account for a year.
And this comes on top of a higher tax rate on savings this year.
Households have some €92.5bn in savings with the banks.
David Kerr of Bonkers.ie said: "In the past year we have seen savings interest rates reducing by over 40pc.
"Last year it was possible to get a 12-month term account at a rate of 4.75pc.
"The best rate on the market for personal savers over 12 months now stands at 2.8pc with KBC Bank and 2.75pc with Danske Bank or Nationwide UK (Ireland)."
Mr Kerr predicted that this year would not be a great one for savers as the rate of interest is being steadily eroded.
A recent Central Bank report found that banks have been cutting the interest they pay savers every month since April last year.
Mr Kerr said this month's move by the European Central Bank to cut its key lending rate was bad news for savers.
Meanwhile, the Irish Banking Federation admitted yesterday that its members have been lobbying to have the interest rates paid on state savings schemes cut.
Felix O'Regan of the banking body said it was necessary to cut the rates paid by the An Post/National Treasury Management Agency to "level the playing field with banks".
The state savings schemes pay up to 3.79pc a year, putting the banks at a disadvantage.
The three domestic banks have been lobbying the Department of Finance to introduce interest rate reductions on An Post savings accounts.