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Saturday 22 July 2017

AIB cuts savings rates with more on the way

AIB’s Access Deposit 30 account will now pay just 0.05pc to personal customers, down from 0.1pc, on an annual equivalent rate (AER) basis (Stock image)
AIB’s Access Deposit 30 account will now pay just 0.05pc to personal customers, down from 0.1pc, on an annual equivalent rate (AER) basis (Stock image)
Charlie Weston

Charlie Weston

Savers with AIB are set to see the interest they get on their deposit accounts slashed.

The State-owned bank, which is preparing for a flotation, has cut the interest it pays on a number of deposit accounts to just 0.01pc.

The reductions apply to seven accounts and apply from today.

However, it has resisted following moves by its rival Bank of Ireland, which this week reduced a number of its savings rates to zero.

AIB's Access Deposit 30 account will now pay just 0.05pc to personal customers, down from 0.1pc, on an annual equivalent rate (AER) basis.

The rate on the Online Personal Savings Plan goes from 0.15pc to 0.01pc.

This works out at a payment of €1 on savings of €10,000 over a year.

And that is before DIRT (deposit interest retention tax) of 39pc.

After tax, the interest paid will be just 61c.

The Regular Saver account will now pay 0.01pc, down from 0.15pc.

AIB has also served notice that it will be cutting rates on a number of other accounts from May 22.

The AIB Saver account will see interest paid on the regular saver version drop from 2pc to 1.5pc. The standard rate on this account will fall from 0.15pc to 0.01pc.

Asked why it was cutting rates, given that it was rescued by taxpayers, a spokeswoman for the bank said: "AIB keeps its customer deposit rates under review on an ongoing basis."

The bank said the latest pricing action means it "will better align its funding costs to reflect prevailing low market rates while endeavouring to offer value to customers".

It said the downward pricing pressure is being applied across the Irish deposit market as banks respond to the negative interest rate environment.

AIB insisted its rates remain competitive.

It continues to offer leading market rates to its regular savers, the spokeswoman said.

Irish Independent

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