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Theherald

Banks may want your money, but search for the best deals when you’re saving for that even rainier day

We’ve been told to expect green shoots around corners we’ve supposedly turned so many times that it’s amazing we’re not prancing into verdant meadows at the end of every street.

In recent times the Irish have become very careful with any spare money we have and up to now have been using it to pay down debt.

Loans, credit cards, even the mortgage are all getting top priority. But… and I’m keeping my voice down now, there is actually some evidence, finally that we’re beginning to start saving properly again.

Not splurging on luxury items as Mr Noonan would like us to do, but at least it looks like household debit is beginning to be kept under control.

The latest figures from the Nationwide UK Ireland Savings Index reported that fewer people are using surplus cash to pay off loans but are instead saving it for an even rainier day.

DIFFERENCE

The act that interest rates are flatter than a pancake certainly isn’t encouraging them and 15pc even say they are now “happy” with the amount they’re saving.

In the savvy over-50s category, 64pc believe government policy doesn’t help savings, and they’re right. Increasing DIRT tax rate to 33pc in the last budget was the stick rather than carrot approach.

When it comes to savings the banks want your money, but only if you’re saving regularly. Look at the difference in interest offered: €100 a month will get up to 4pc a year if you shop around; put in €3,000 in one go, however, and you’ll be offered anything from a laughable 0.05pc (that’s €1.50 for the year from AIB) to 2.05pc (Rabo).

Why? Well, monthly savings are more attractive – it hooks you in and keeps you as a customer. What else maximises your interest rate?

  • Open your account online – you’ll get a slightly better rate.
  • Limit the savings to €1,000 a month (yes, they drop your rate significantly if it goes above that). If you’re lucky enough to have more, open a separate account.
  • Lock your cash away. If you want it back on demand, or need withdrawals, you’ll get a lower rate in return. It improves the longer you leave it there, so for example a 90 day notice generally pays more than an instant demand account.
  • Ask if the rate I variable of fixed.
  • You may need to be an existing customer to avail of some rates, so ask.

COMPARISONS

Our table shows a sample of rates on offer. Many offer several types of accounts depending on flexibility, so check on the National Consumer Agency’s new website www.consumerhelp.ie for a fuller list. Alterntively, try www.bonkers.ie – both offer lump sum and regular savings comparisons. Bear in mind that DIRT is payable on all interest earned, except in the case of An Post – state savings are tax free but the rates have recently been cut to reflect lobbying from banks on that issue.

SINEAD RYAN

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