AIB is hiking the rate on some of its deposit accounts to 2%. The move will likely put pressure on BOI and PTSB to improve their offerings.
The country’s largest bank has responded to intense pressure and increased its savings and deposit rates today.
It’s doubling the rate on some of its accounts to 2%. Rates at its subsidiary, EBS, are also going up.
Here’s all you need to know…
AIB
AIB is increasing the rate on its Regular Online Saver account from 1% to 2%. However this only applies to the first €1,000 per month for 12 months. A rate of just 0.10% applies after this.
AIB is also upping the rate on its Junior and Student Saver accounts from 1% to 2%. However this only applies to the first €1,000 in total. If you build up savings of more than €1,000, a rate of just 0.10% will apply to the balance.
And the bank is also hiking the rate on its one-year fixed-term deposit account from 0.50% to 1.50% for personal and business customers. However you must have a balance of at least €15,000 to avail of this rate.
EBS
Rates at AIB’s subsidiary EBS are also going up.
EBS is hiking the rate on its Family Saver account from 1% to 2%. This applies to savings between €100 and €1,000 per month for the first year - a rate of 0.10% applies after this.
EBS is also upping the rate on it Children’s and Teen Savings Account from 1% to 1.50%, but this rate only applies on balances of up to €5,000.
You can compare all savings options from all lenders in Ireland using our savings account comparison service.
A bit of perspective….
While it's great to see savings rates begin to creep up, the returns on offer are still well below the rate of inflation. And of course you’ll pay DIRT of 33% on any gains you make.
Also, deposit rates of over 3.50% are now available in many countries throughout Europe. So these new rates from AIB are still average at best. And of course, there are caveats to AIB’s offering. The 2% rate only applies to savings amounts of up to €12,000. Trade Republic, which we review here, offers 2% on balances of up to €50,000 for example.
However, on the flip side, the main Irish banks have been slow at passing on the recent ECB rate increase to their mortgage customers. This is why Ireland now has among the lowest mortgage rates in the Eurozone.
In essence, savers have been subsidising mortgage customers. So if we want to have higher higher saving rates it’ll likely come at the expense of higher mortgage rates.
What does the future hold?
The European Central Bank (ECB) is likely to hike interest rates by another 0.50 percentage points in total over the coming weeks. So AIB and its main competitors BOI and PTSB will come under pressure to improve their deposit rates further.
However it's likely savings rates will still remain below the eurozone average for the foreseeable future.
Alternatives to the main banks
There are plenty of options for your savings other than the main banks.
If you’re looking for a better return on your money, a good option might be investing through Raisin. With Raisin Bank, Irish savers can easily access the savings rates on offer from banks all over Europe by signing up to its online account. And these rates are usually well above what's on offer from Irish banks.
And you can also save through the aforementioned Trade Republic.
Check out our article on alternative savings options for more information.
We also recorded a podcast this year on alternative savings options for consumers if you’d prefer to sit back and listen - you can find that episode here!
