Current accounts: a deep dive
With Ulster Bank and KBC both announcing plans to exit the Irish banking market, many of you will be looking for a new home for your current account.
And while options for switching may be looking more limited, there is still good value and choice on offer from the remaining players who still offer current account services in Ireland.
In this podcast we take a deep dive into current accounts to see which provider is offering the best value.
Here are the main questions answered and points discussed by Daragh and Rob in the podcast.
Why are current account switching levels so low in Ireland?
There are a few reasons why people don’t switch current accounts more frequently.
It tends to be a mix of inertia, as people don’t want to take the time and effort to switch, fear of something going wrong during the process, and also mindset. People feel like there isn’t money to be saved or they feel like all the banks are the same, but you can still save money.
How to switch current accounts
There are two ways to switch current accounts.
1. The Central Bank’s Switching Code
The Central Bank brought in a switching code of conduct a few years ago, due to the low switching rates.
The code is to make it easier for people to switch. If you’re looking to switch from one bank to another, you can fill out a switching pack and choose a date for the switch to begin. Your new account needs to be up and running within ten days of that switching date. The bank will also help you to transfer things over like direct debits, and standing orders.
It’s best to switch when there’s the least activity on your account. Usually, people pick a switching date in the middle of the month.
2. Open a new bank account
Another option for people is to open up a new bank account, keep their existing account and then gradually transfer things over, once they’ve gotten used to the new account. Then they can close their existing account. With this option, you’re not going to have the hand-holding that the bank provides.
Even if you use the switching code there’s probably room for improvement. Not enough people are using it due to people opening up new accounts, then not closing their old one.
What are key considerations when choosing a current account?
There are several key questions to think about when choosing a new current account.
- Do you need an overdraft? Not all providers offer this.
- Are mobile payments important to you? Not all providers offer Apple, Google or FitBit Pay, although most now offer at least one.
- Is a branch network essential to you? If you have a small business or you need to lodge cash and cheques this may be something to consider.
- Do you travel much? Foreign exchange fees charged on card payments might be something to think about.
- How do you use your money? If you withdraw and use a lot of cash you should know that some providers have quite high fees for withdrawals.
How much can people save by switching?
Banking is more personal than other products and services. Obviously with energy, it will depend as well on how much you’re using, but with a current account, it’s more complicated.
On bonkers.ie you can use our comparison tool to select how many contactless payments you make or how many chip and pin or cash withdrawals you make to see the best value account for you.
You could save €6-12 a month by moving to a cheaper option, as all the direct debits, standing orders, chip and pin transactions and cash withdrawals add up. It mightn’t necessarily seem like a huge amount, but that’s over €100 potentially a year.
The main current account providers
There are three pillar banks left in Ireland: AIB, Bank of Ireland and Permanent TSB.
AIB is the biggest and most well-known bank in Ireland, however, the current account on offer here is particularly poor value.
- AIB has a large branch network.
- It offers both Google Pay and Apple Pay.
- It has a great, user-friendly app that has a block/unblock card security feature.
- AIB offers an overdraft.
- There is still the dreaded card reader that’s still needed to carry out various transactions.
- There’s a €4.50 quarterly maintenance fee, a €0.35 fee for every ATM withdrawal and a €0.20 charge for every chip and pin transaction, self-service lodgement, online transaction, direct debit and standing order.
- Every time you use your account, except for contactless payment, you’re being charged.
Bank of Ireland
Bank of Ireland (BOI) is probably the next most well-known bank in Ireland.
- BOI has a large branch network.
- It offers both Google Pay and Apple Pay.
- It offers an overdraft.
- All day-to-day banking is included in the monthly maintenance fee, e.g. chip and pin, cash withdrawals, lodgements, etc.
- BOI doesn’t charge for referral fees, which is a fee charged when a cheque bounces or a direct debit gets presented and there isn’t enough money in your account. Sometimes this costs €10-15 with other banks.
- The quality of its mobile app and online banking services lag behind AIB's.
- BOI has an expensive flat rate monthly account fee of €6, regardless of usage.
PTSB is a good option depending on how you use the account.
- Like BOI, all day-to-day banking is included in the monthly maintenance fee.
- Every time you use your debit card to pay for something, the bank will pay you back €0.10. You can earn up to €5 per month through this feature alone, which means you could offset most of the maintenance fee each month.
- If you're a customer of SSE Airtricity or Sky you can get up to 5% cashback on your bills when you pay them by direct debit from the account.
- If you have a mortgage with PTSB and you pay it back from the Explore Account, you’ll receive 2% cashback on your monthly mortgage repayments.
- PTSB’s Explore Account has a fairly hefty €6 monthly fee.
- Its mobile app is quite poor. It lacks basic features, such as fingerprint or face login.
- It doesn’t yet offer Google Pay, but this is planned to launch at some point this year.
What are other banking alternatives?
There are three options out there. There’s the An Post account, the Credit Union Account and then there’s the EBS Money manager account.
- You get one fee-free withdrawal a week at an An Post ATM.
- An Post offers Apple, Google and Fitbit Pay.
- An Post has a good mobile app on offer.
- The An Post current account is quite expensive. It had a €5 monthly fee and a €0.60 ATM withdrawal fee. This may not be the account for you if you like using cash.
- You'll also be charged €0.50 for any cash or cheque lodgements at your Post Office. Other than that, all your day-to-day banking is free.
- There’s no overdraft on this account.
Some of the largest Credit Unions in Ireland have come together under the currentaccount.ie brand for Credit Union members.
- Current account holders get five free ATM withdrawals a month.
- There is an overdraft available with the account.
- After the monthly maintenance fee, all day-to-day banking is free.
- There’s a €4 per month fee.
- There’s a €0.50 charge for every ATM withdrawal after customers avail of the five free ones. If you’re a big fan of using cash, this may not be the account for you.
- The Credit Union’s online banking is not quite as advanced as other providers, but it’s improving all the time.
If you’re happy with the absolute most simple services, without all the bells and whistles, then EBS is potentially an account to consider and it’ll cost you almost nothing to run.
- There are no real fees and charges with this account. There’s no monthly fee, there’s no lodgement fee, no ATM withdrawal fee and there’s no contactless charge.
- There’s no overdraft with this account.
- There’s no Apple Pay or Google Pay on offer.
- There’s also no mobile app, but there is online banking so you can log on and access yourself.
- You can’t lodge foreign currency to the account either, it’s a Euro account only. For some that mightn’t be an issue.
Revolut and N26
The fintechs are dominating the space at the moment. N26 has around 200,000 customers in Ireland at the moment, whereas Revolut boasts that it has around 1.2 million customers. Both of the accounts are quite similar and they have the same pros and cons.
N26 is actually a bank. It has a German banking licence and is licenced by the German Central bank. Your money is as safe in N26, as it is with any other bank. Revolut technically holds an e-money licence though, so there is a slight difference.
- For both accounts, there’s no monthly maintenance fee and all of your day-to-day banking is free.
- They have amazing mobile apps, with up-to-the-minute push notifications and analytics on your spending. The apps allow you to toggle on and off many security features. For example, you can turn off contactless payment and both apps have a block/unblock card feature.
- They both have in-app reward schemes.
- Both apps offer Apple Pay and Google Pay.
- You can send money quickly and easily to other people.
- There are no foreign exchange fees on card purchases outside the Eurozone. So with N26 it’s unlimited for now, and with Revolut it’s up to €1,000 a month.
- On Revolut you can access bitcoin and other cryptocurrencies.
- These are online-only banks, so if you want to lodge cash, you’ll find yourself stuck. With N26 you get three fee-free ATM withdrawals each month. After that, there’s a fairly hefty €2 charge per withdrawal.
- Revolut allows you to make five withdrawals a month, and there's a withdrawal limit of €200. After that, there’s either a €1 charge or 2% of the amount withdrawn, whichever is higher.
- With both of these, you do not get an overdraft.
Despite their cons, these fintechs are two of the best when it comes to digital offerings.
How do these fintechs make money?
Both apps are businesses, they’re not charities. They have had hundreds of millions in investment and Revolut hasn’t even made a profit yet. Eventually, there will have to be some sort of charges brought in.
You can get premium accounts with these providers, which is where they make money.
The apps are also branching into the insurance world, where they’re acting as a broker. It’s also likely that they’re taking a bit of a cut with their reward schemes.
One place they might make more money is with credit services. Even though N26 is a bank and it does offer overdrafts in other countries, it doesn’t offer an overdraft in Ireland.
Many wonder if it’s possible to get your salary paid into a Revolut or N26 account, as people want to use them as their day-to-day regular account.
Unfortunately, there’s something called IBAN discrimination that still happens in Ireland. When you take out an N26 account, you’ll be given a German IBAN and when you take out a Revolut account, you’ll be given a Lithuanian IBAN.
Some payroll systems are so old that they don’t recognise these foreign IBANs and sometimes utility companies have problems taking direct debits from these so-called “foreign accounts”, even though it’s illegal under SEPA. We’re supposed to have a single market for banking services.
Is there any point in switching your current account to Ulster Bank or KBC, even if they’re leaving?
If it was a mortgage, then yes, as Ulster Bank offers a great mortgage and people can still take out their mortgage with them. Even if it gets sold on, your terms and conditions need to stay the same in general.
When it comes to a current account, there’s not any point in switching. It’s not something that people are going to want to do once or twice in the space of a year.
The final say
There’s no one-size-fits-all or one current account provider that ticks all the boxes.
Revolut and N26 come close to being the perfect offering. If N26 decides to offer an overdraft, and if the IBAN discrimination issue is fixed, it will be offering a great account.
Permanent TSB is probably the safest bet overall. The account has good cashback offers, there’s a strong branch network, and it accepts cash. It’s more competitive from a fee point of view than BOI and AIB. The only negative is its online offering.
Switch and save today
Are you considering switching your current account? What do you think of the fintechs dominating the market at the moment? We’d love to know in the comments.
At bonkers.ie, we offer a range of banking comparison services that will help you lower your banking costs.
Take a look at our guide on how to switch current accounts for more information on what was discussed in the podcast. We also recently made a video to evaluate the best value current accounts in 2021, which may be of interest to switchers.