Savings Account Interest Rates Continue To Reduce

Following on from last week's announcement from the ECB that interest rates would be reduced to an historic low of 0.5% (the historic high being 4.25% back in July 2008), we thought it would be worth noting the changes in savings interest rates being offered to savers in the last week or so.

All of the changes to savings account interest recorded on bonkers.ie in recent months have been a reduction in savings interest - the last general increase in savings interest was recorded early last year.

It would normally be the case that the other side of the interest rate coin, the interest rate at which Personal Loans & Mortgages are offered, would reduce in step with the reduction in interest rates charged by the ECB. 

In the times we are in, it would be almost miraculous for Loan rates to reduce, especially given that many thousands of Mortgage holders from one of our two pillar banks received notice of an increase in their Standard Variable Rate on the very day that the ECB announced to thousands of tracker mortgage holders that their rate would be reducing.

In the past year then, we have seen Savings Interest rates reducing by over 40% - last year it was possible to get a 12 month term account at a rate of 4.75% AER. The best rate on the market for personal savers over 12 months now stands at 2.8% AER with KBC and 2.75% AER with Danske or Nationwide UK (Ireland).

This year will not be a great year for savers as the amount of interest earned is being steadily eroded, first by cuts in savings interest rates and then when the taxman takes 1/3 of the savings interest amount earned in the form Deposit Interest Retention Tax.

So the ECB rate cut continues to be good news for tracker mortgage holders, and bad news for savers.