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AIB and Bank of Ireland cut savings rates

Ireland’s largest banks, AIB and Bank of Ireland, have each cut interest rates on a number of savings accounts, taking rates to new historic lows.

Jonathan Swift once said that “a wise person should have money in their head, but not in their heart”. If he was still with us today, I wonder if he would have replaced “heart” with “bank” in that saying.

Savings rates are at an all-time low and look still be on a downward spiral, leaving many of us wondering if it really is wise to keep hard-earned cash in the vaults of Ireland’s banks these days, gathering little other than dust.

AIB and Bank of Ireland, the country’s two largest banks, have this week decided to shave another few basis points off the rates being offered to some savers.

Fresh cuts

On Monday, Bank of Ireland cut its Demand Deposit rate from 0.01% to 0.00%, meaning that savers with this type of account will see no return for keeping their cash with the bank.

AIB followed suit with a cut of its own, but hasn’t quite taken its rates to rock bottom.

The bank has instead cut the rate on its Access Deposit 30 account from 0.1% to 0.05%, its Online Personal Savings Plan from 0.15% to 0.01% and its Regular Saver account from 0.15% to 0.01%.

At a rate of 0.01%, a saver putting €10,000 away for a year will see a return of just €1 over the period. And when DIRT is taken off that, the actual return works out at just 61 cent.

Best rates currently available

Last year, the European Central Bank revealed that Irish savers are getting the lowest return on their hard-earned savings out of 18 EU countries and it is becoming increasingly difficult to find rates that are in any way attractive.

KBC is offering a rate of 0.80% for a €10,000 lump sum locked away for a year, which is the best return available for this type of deposit right now. That will produce a return of €80 before DIRT and €48 after.

Permanent TSB is offering 0.75% and Nationwide Ireland (UK) is offering 0.65% on the same lump sum amount and term.

With no change in the direction of savings rates predicted by the experts, it is important to make sure your money is in an account that will give you the best possible return in this historically low interest rate environment.

You can compare rates for regular saver and lump sum accounts on now