Smarter Savings: under the matress or in a bank?

Smarter Savings: under the matress or in a bank?

There are literally hundreds of savings accounts in the market. Banks are very eager to mind our money, and with new capital requirements they’re keen to pay high rates of interest to get it. Not all accounts are suitable for every saver – we take a look at different types of accounts and show some trends in the savings market in general. I discussed this topic on RTE1's FourLive show with Maura Derrane on Monday October 11th 2010.

The major trend we are seeing from our research of on-site (anonymous) searches is confidence in the future - we have noted here before that between May 2009 and May 2010, €4,900,000,000 was transferred from TERM deposit accounts into NOTICE deposit accounts. This is a significant statistic and could point to the fact that people are concerned about having enough money for day to day expenses and are reluctant to put their money in term accounts where the access is limited.

While there are some people who actively manage their savings and make the decision to put their hard-saved cash into notice accounts, there is a similar number of people who do absolutely nothing to manage how their savings perform in terms of earning interest - there is approximately  €40,000,000,000 on deposit in banks around the country earning on average 0.63% savings interest. The banks are so keen to get at our savings that they are offering headline rates that would make our neighbours in other European countries jealous - however they are not  actively looking to their existing deposit base to encourage those depositors to move their money into a higher yielding account - and why would they? they've already got your money and are very happy for you to let it sleep on their balance sheet, earning you nothing but providing them with the vitality to continue trading. 

To those who actively manage their money, you should be applauded - taking advantage of the banks' high rates of interest is crucial to making your cash work for you in an active way - you deserve the 3.5% AER on a 1 year fixed rate term deposit that Anglo is currently offering. You deserve the 3.3% AER you will earn with Nationwide (UK) Ireland for their instant access deposit account. 

If you have not managed your money actively in some time, if you have a lump sum in an old style Demand Deposit account earning 0.01% AER (which works out at €1 per €10,000 per year on deposit) now is an excellent time to start doing something with it. If the inertia to manage your money is partly due to uncertainty in the future of Irish banks or their credit rating, then why not search the market and use credit rating as a factor? Our savings account finder takes the hassle out of deciphering the hundreds of savings accounts and also lets you specify whether you want to have your results shown in order of interest rate (AER) earned or credit rating of the bank offering the savings account.

Thousands of people have used bonkers.ie in their search for a savings account and have chosen to have their results listed in order of credit score. By doing that they have found a home for their hard earned cash, earning many hundreds of times savings interest.

Moving your money from a crappy 0.01% account to a modest 2% account in a AAA-rated bank is not difficult & will earn you hundreds more on your savings. 

The bank guarantee scheme comes to an end on December 31st 2010 - it is important to note that this is not a 'bad thing' in itself, but a return to 'normal' in terms of the guarantee people have on their savings - it is very likely that come January 1st 2010, we will revert to the old Depositors' Protection Scheme which provides a limited guarantee of up to €100,000 per depositor. The exception is if you open a Term Deposit Account with some institutions who are regulated by the Irish regulator - by opening a Term account now (1-10 years) then you will extend the unlimited bank guarantee for the entire duration of the term. IF you are concerned about your deposits and a Term account is a good fit for you (see below) then you should consider opening a Term deposit before the deadline of December 31st 2010.

When considering a savings account, there are lots of questions, below is a simple checklist to get started.




Pick the correct savings account for your circumstances

Settle for the recommendation of your bank

Find a term you’re comfortable with - no longer

Lock your money away if you need to get to it

Check rates available

Forget about DIRT!

Take advantage of great rates of interest on offer now

Be too loyal – it doesn’t pay

Open a child saver account

Forget that it's never too late to start saving

Consider a term account if you have a lump sum



We will take a look again at savings accounts before the end of the Bank Guarantee - these savings rates change all the time - and we will take a snapshot of the state of play then. Hopefully you'll agree that the best place for your savings is in a bank account that's earning you at least 2% in savings interest, no matter what type of account you choose.


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