LATEST figures show families are saving more - SINEAD RYAN

The Nationwide UK (Ireland) savings index which is a pretty good indicator of consumer sentiment shows that 41pc of people are now saving regularly, up from 35pc. "Most are still concerned with things like taxes and government policy (which favours the 'stick' rather than 'carrot' approach) but the real question is, why? Interest rates have never been lower. The strain on family incomes has never been higher. The tax on putting rainy day money away is a punitive 41pc.

The answer is fear. People don't tend to save when things are good, but they squirrel money away when they're fearful of what's coming down the road, which explains why, when there is precious little money to be made from banks, they're reeling in cash from worried depositors.

This week we're looking at where you can put your money to try and make a few bob.

Our table shows the latest interest rates for someone with, say,€100 a month to put away. Banks love regular depositors, even more than those with lump sums. And they need the cash. Even the lowest rates at just 1 or 2 pc p.a. are still well above inflation, so they're offering over the odds to attract customers.


There are things you need to watch out for, though, and not get bamboozled by the 'rate* on offer. It may not be all it seems. The Questions you need to ask before committing your cash are:

> Is there is a set term? Do you have to lock in your money for say, a year or more?

> Is the rate fixed or variable? Is it likely to change over a year?

> Can you access your money without penalty? Many accounts are fine with this, but others limit withdrawals to one or two a year.

> Is there a monthly limit on the amount you can save at this rate? For all the banks we surveyed, it's €1,000 p.m.

> Deduct DIRT tax from the gain (currently 4lpc) to get the real return. If you're over 65 you may be DIRT exempt.

> Would you be better off in the Post Office? Buying prize bonds may seem old fashioned, and carries no interest at all, but your money's safe and any winnings you make are tax free.

> Understand the terminology. All banks must show the AER (annual equivalent rate), which is important if the "gross" rate is higher, e.g. the term of your contract is more than one year.

> When is interest paid? With many accounts it's only once a year, and if you withdraw before that time, you may lose money.

You can often secure a better interest rate in two ways: by leaving the money there for longer, e.g. at least a year and secondly, by having a fixed notice access. In other words, you have to give the bank notice of withdrawals and can't access it whenever you like. Notice periods range from seven days to three months, but it's by no means guar-anteed that a longer notice period means a better rate, so always ask.

When setting up a deposit account you will be asked for lots of ID. This is money laundering legislation and not the bank's fault. Typically it will include a State document with a photograph, e.g. passport; evidence of your address by way of utility bills and possibly a bank statement.

Good websites to check current rates are www.consumerhelp.ie, bonkers.ie and moneyguideireland.



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