Minister for Public Expenditure, Paschal Donohoe, said it’s not “unpatriotic” for Irish citizens to put their savings in other European bank accounts if they can get a better deal there.
Donohoe, who is also the president of the Eurogroup, insisted that it was one of the advantages of a single market that people can get a better rate of interest.
His comments come as Irish banks are offering their savings customers among the lowest interest rates in Europe, while passing on higher rates of interest to those who are borrowing.
READ MORE: What to consider before switching savings accounts in Ireland and general savings tips
“It’s up to people who have money they are going to put on deposit to get the rate of return that they think is best for them,” Donohoe said.
“Looking to put money in other parts of Europe, and other banks elsewhere in Europe, is not an unpatriotic act.
“It’s the way the single market functions.
“We want European banks to provide services here in Ireland, and if Irish households want to avail of those services and put their deposits elsewhere, that’s the way the single market functions.
“That’s the way it should function.”
He added he’d like to see competitive interest rates be offered to Irish savers in Ireland.
“They are commercial decisions, they are matters for Irish banks, to make those decisions independently of the government.”
Interest rates in the European Union
According to the Competition and Consumer Protection Commission (CCPC), someone who’d like to open a deposit account to save €1,000 per month would earn 2 per cent interest per year at best.
Some deposit accounts in Ireland are offering interest rates as low as 0.1 per cent.
Unless they use State Savings, the interest earned is subject to Dirt tax of 33 per cent.
Even if savers go abroad, where interest rates of up to 4 per cent are available, Dirt still has to be paid.
Irish savers have €151 billion on deposit in this country but inflation is eating into it despite interest rates.
Inflation was 5.8 per cent in July.
An EU citizen can place money in any EU bank.
All EU banks are covered by the Deposit Guarantee Scheme (DGS), which covers deposits up to €100,000 per person, per account if a bank fails.
Websites such as raisin.com allows savers to compare interest rates across the single market.
Fintech company Bunq can also let you see what’s available on continental Europe.
However, it is important to check how the interest rate is taxed in that country before making a final decision.
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