Irish banks are paying savers interest r ates that are four times lower than the e urozone average, the Irish Independent can reveal.
t a time when interest rates on mortgages are soaring, the average paid out on savings is a mere 0.17pc – or €17 on a yearly deposit of €10,000 – compared with a eurozone average of 0.69pc.
The banks have been called on to give savers a break after it emerged that interest rates paid on savings in this country are among the lowest in the eurozone.
And the rates on offer have barely changed in the last four years.
This is despite a sharp rise in European Central Bank ( ECB) rates in the last few months and rises in savings rates in the rest of Europe.
The Irish average rate is four times lower than the average for the eurozone of 0.69pc, according to Central Bank figures.
Deposit rates of over 1.10pc are now on offer in some countries such as Italy and France.
Meanwhile, tax of 33pc has to be paid on any interest earned from savings in a bank or credit union in this country.
Chairman of the Consumers’ Association of Ireland Michael Kilcoyne accused the banks of “making out like bandits”.
He said we have some of the lowest savings rates in the eurozone but some of the most expensive mortgages, credit card rates and loan rates, and called on the banks to start paying decent interest rates to savers.
“They are making out like bandits, because they are paying little or nothing to savers yet have some of the highest mortgage, credit card and personal loan rates in Europe. It’s time they paid more interest on savings,” he said.
Many of those with savings in the banks are older, and rely on fixed incomes such as pensions, Mr Kilcoyne
added.
Irish households have a record high of almost €150bn in savings on deposit with Irish banks.
It has been calculated that the Irish banks are set to make a €1bn killing on deposit and lending spreads by depositing this money with the ECB.
This is because the ECB is now paying banks 1.50pc interest on money deposited with it.
An analysis by price comparison site Bonkers.ie for the Irish Independent shows the best rate for regular savers among the main banks is currently just 0.40pc AER (annual percentage rate).
This is offered by Permanent TSB on savings up to €50,000.
Bank of Ireland offers just 0.25pc AER on amounts up to €15,000 with its GoalSaver account.
And AIB, the country’s largest bank, offers just 0.10pc at present, Bonkers.ie found.
The ESB and AIB have children’s savings accounts which offer 1pc AER.
However, the ESB account has a maximum balance of €5,000, while the AIB account has a maximum balance of €1,000.
For those with a lump sum, Permanent TSB now pays 1.25pc on its five-year fixed-term deposit, having increased its deposit rates last week.
But AIB only pays 0.25pc on amounts over €15,000 with its new one-year fixed-term account while Bank of Ireland offers very low returns, Daragh Cassidy of Bonkers.ie said.
Since July the ECB has raised both its deposit rate and its main lending rate.
The banks in this country have responded by increasing some of their fixed mortgage rates.
Slightly higher rates are available through State Savings products, and returns are free of Dirt tax, though the interest rate has been slashed by the Government in recent years, Mr Cassidy said.
He said that in recent months, Irish mortgage rates have become a bit more attractive compared to the rest of the eurozone as the main banks have held off on passing on all of the ECB’s rate increases.
While this is welcome, it has largely come at the expense of savers.
