Savers can earn decent money - or a pittance. The choice is yours!

Falling interest rates are good news for Borrowers. But what should savers do? There are plenty of good deals but most savers ignore them to leave their money on demand earning a pittance.

Irish banks are finally passing on some of the big recent hikes in Eurozone interest rates to their savers.

But only a relative handful of savvy savers who make a little effort to transfer their cash into higher-paying term accounts will really benefit.

The vast majority of Irish money is “on demand” in accounts paying just 0.13% on average.

"Private households have over €153bn on deposit in Irish banks. 94% of that, over €142bn, is in instant access accounts. So getting the best instant rate is the most important consideration for most,” says Mark Coan of Moneysherpa.ie.

Two year interest rates increased to 2% on average even as interest rates fell in the first half of 2024, the Central Bank figures show.

And all Irish mainstream banks - i.e. AIB, BoI and PTSB - offer at least one account (from very many) paying up to around 3% over 18 months to two years.

Yet most savers don’t benefit because their money languishes in ‘on demand’ deposit accounts paying out practically zero!

There are plenty of better deals out there as our table shows.

But which is the best one?

*Sample rate from Raisin.ie, which offers access to accounts across Europe.

Deposit account deals correct at 10/10/24. The best deals are fixed rates over 18m - two years (if you can lock your money away) from the mainstream banks as interest rates are falling fast.

Raisin.ie offers access to Irish savers to many banks accross Europe, who have highest rates topping 3% from

These banks are within the Eurozone, which means there’s no currency exchange risk and a €100k guarantee.

AIB, BoI and PTSB’s have deals at around 3% deal if you can lock your money away for at least 18 months to two years.

How much interest you earn depends on the extent to which you need access to their savings.

Most people seem to want money available “on demand”. But do they really need instant access to all of it all of the time?  Most people, I imagine, just want the possibility of getting access to it in an emergency.

So consider the terms and conditions on savings accounts that may or may not suit you.

For example, you can’t get access to your money at all with AIB’s 3% two-year fixed deal.

With PTSB you can withdraw money – but at a price. You’ll hit you with a withdrawal charge if you want to take it out before the full three years have elapsed.

An Post also has a 10 year bond paying 2% a year.

At first glance, it seems to pay out just two thirds of what AIB and PTSB offer – over what seems an onerous ten year term.

But this deal is far better and less restrictive than it looks, which is why we placed it second in our table.

Firstly, the rate is tax-free (thus avoiding 33% DIRT) so it’s really worth 3%, matching both banks, if you’re liable to DIRT.

Secondly, you can withdraw your money with only seven days’ notice – and even still earn some interest on it, though it at a much-reduced rate.

However, if you want one of the best of both worlds – i.e. decent interest rates and instant access to your money – BUNQ seems hard to beat.

Mark Coan of Moneysherpa agrees: “Our recommendation for the best savings account overall is the Dutch bank Bunq. Bunq win out due to the combination of a competitive interest rate, instant access and easy sign up.”

“You can get over 2 % on your savings by signing up to Bunq. If you want to fix for longer for higher rates you can sign up to Raisin.ie .”

What else do savers need to know?

NOTE: These rates are from a survey from mid-2024 and will change as interest rates fell since then. However they are an indication of what different banks paid on deposit at that point.

What should we do to get the best return for their money? Mark Coan of Moneysherpa.ie has some answers our questions on deposits

Mark Coan, Moneysherpa.ie

Some savers are switching to longer fixed rates and rates in Irish banks are going up. However, the vast majority of deposits are still on demand earning a pittance. Have you any advice for your clients on deposits?

 As a general point we advise savers to have around 6 months of outgoings in an instant access account as an emergency fund. Even if interest rates are higher for fixed rates, then if you tie up your money it's no longer available in case of emergency, which can end up with a lot more cost and bother. For your emergency fund then you should be looking for the best possible instant access rate, that means moving your money from Irish banks to other European providers. 

CB figures show average fixed deposit rates >2yrs now over 2.5%. Who’s offering those rates in Ireland?!

Bank of Ireland and AIB do have 2 year fixed products offering around 3% (PTSB offers 2.5% but over 18 months), Raisin customers can get over 3.5% on a 1 year fixed however.

On demand rates such as those offered by digital banks, Raisin and Trade Republic are higher – but they are hardly likely to last are they?

Although these on demand rates are not likely to last they are likely to still be much better than the Irish banks instant rates, so it's still worthwhile to make the switch as instant rates are where most of your money should be. 

 So are you advising savers to fix long now with rates falling?

Yes, but only if you have already got six months worth of outgoings tucked away in an instant account, otherwise what you gain in interest isn't worth the loss in flexibility.  

Raisin offers rates at 3%+ over 3years  but some readers were concerned about its Trustpilot reviews?

Some have found the onboarding process for Raisin cumbersome with poor communication and a clunky ID verification process. If you are tech savvy though and able to navigate your way through it the higher rates generally make the set up hassle worthwhile. 

Are there fancier secure options for savers like cash and bond funds – that invest in deposits and secure investments like bonds -  that could do better?

I'd tread carefully once you go outside bank guaranteed savings. Although returns can be higher your capital might be at risk so the trade-off is unlikely to make sense. Get advice from a qualified financial advisor before making any significant investment decisions.

Consider other options

Deposit interest isn’t the only way to get a solid return on your savings.Here are three  other suggestions:

• Pay off your mortgage early and get instant tax-free return of around 4-5%.

• Trading Republic is an investment platform that pays 4% for money you leave with it - with instant access anytime (max €50k). T&Cs on the website.

• Investing is always an option though it’s risky. You can reduce the risk by putting your money into a cash or Government bonds fund, which are safer.

• Investing in your pension minimizes risk further. Firstly, you can save 40% on tax. Your investment is also normally over such a long term that the investment market turmoil should smooth out, while there’s always the option of switching into safer funds as you wish.

Don't forget to take inflation into account when weighing up investment and savings options.

The good news is that it has fallens sharply to levels where you can get a meaningful return on deposit - though only if you look for it.

Inflation has also fallen from 6.3% last August to under 2% in the summer of 2024 (using the Consumer Price Index metric).

With interest rates also rising sharply to 3% or more, the savings environment has improved a lot. But if you leave your money on demand earning 0.15%, there's no chance you'll beat inflation!

DIRT (Deposit Interest Retention Tax)

However,  you still need to work hard to beat inflation – after DIRT. This is deducted at 33% automatically from savings interest earned, which dramatically reduces it - if you are liable for DIRT (if not you can reclaim it). An Post's savings products are DIRT-free, which improves their appeal (unless you're not liable for DIRT). And it's also worth considering with EU banks available through Raisin.ie as some do and some don't deduct DIRT in their own countries, which can create hassle.

 (Figures correct as at time of updated publication)