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Savers who keep nest eggs in low interest accounts missing out on €3.5bn – are you one of them?



Savers who keep nest eggs in low interest accounts missing out on €3.5bn – are you one of them?

About 90pc of household savings is in accounts that pay almost no interest, resulting in a €3.5bn loss to savers.

Now, a survey commissioned by price comparison site and carried out by Red C has found that one in four people are unaware of the better rates of interest now on offer.

One in 10 say it is too much hassle to move their money to an account paying interest of 2pc or 3pc a year.

This is despite the fact better rates are available to them without switching banks.

Around a quarter of those surveyed said they were not availing of better rates because they did not want to lock their money away.

Most of the better rates are available only to those who opt for fixed terms of at least six months.

Almost one in 12 say they have not sought better rates because they have no savings goal.

Households currently have a record €156bn on deposit with Irish banks.

Around €140bn of this money is still resting in easy-access demand deposit accounts that pay on average 0.13pc interest.

In other European countries, around 50pc of savers have their money in higher-yielding fixed-term accounts.

The failure of Irish savers to put their funds into such accounts is helping the banks make bumper profits.

Recent figures from the Central Bank of Ireland show the average ­interest rate on a fixed-term deposit account is now 2.68pc.

This is up from 2.51pc at the start of the year and almost 0pc just two years ago.

However, higher rates of 3pc and above are available from the likes of AIB and Bank of Ireland, and through the online savings platform Raisin.

And in recent weeks, online-only banks such as N26 and Revolut have launched instant-access savings accounts with rates of up to 4pc.

Despite this, Irish savers have been slow to avail of the better rates on offer.

Head of communications at Daragh Cassidy said most people had worked long and hard for their savings so they should ensure they perform to their maximum potential.

“There are now plenty of options for people’s money from a range of providers, in both fixed-term and instant-access accounts, so there is little excuse for anyone to leave their money resting in an account where it’s earning almost nothing in interest,” Mr Cassidy said.

He said the research showed large numbers of people were hesitant about locking their money away for a long period of time, which he said was understandable.

However, fixed-rate accounts with terms as short as just six months to a year are available. N26 and Revolut have launched instant-access savings accounts with competitive rates of interest where people can top up their savings and make a withdrawal instantly within the banks’ mobile apps.

Mr Cassidy said the online-only banks, and increasingly the main Irish banks, had made it quick and easy to set up a savings account, especially for existing customers.

This meant 10pc of people who believed it would be too much hassle to avail of a better savings rate should reconsider.

But he said it was worrying that a quarter of respondents were still unaware of the better savings rates on offer. This was despite the fact that half-decent rates had been available for well over a year now.

This article was amended on 11th July, 2024

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