Saturday 22 October 2016

Bailed-out banks offer lowest rates for savers

Published 06/01/2016 | 02:30

Permanent TSB. Photo: Steve Humphreys
Permanent TSB. Photo: Steve Humphreys

State-rescued banks have emerged as the stingiest when it comes to paying interest on savings accounts.

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The rates are so bad that the taxpayer-funded banks have been compared with Charles Trevelyan, the British administrator who was reluctant to help Famine victims in this country in the 1840s.

A survey by the Consumers Association shows Bank of Ireland, Permanent TSB and AIB pay the lowest interest rates on deposits.

Financial adviser Frank Conway said banks were giving customers a raw deal.

"They have become the landlords of the 21st century, extracting enormously but with as much empathy for the needs of the local communities as Trevelyan himself," he said.

Charles Trevelyan is a hate figure from history. He believed the market should hold sway, instead of the British state giving relief to victims of the Famine.

Mr Conway added: "After costing billions of euro for ordinary taxpayers, the hope that our banking services would become more community-oriented simply has not materialised."

He was reacting to a survey of deposit rates that showed bailed-out banks paying just €1 in interest, before tax, on €10,000 deposited for a year.

Domestic banks were bailed out at a cost of €64bn to the Exchequer.

The survey looked at lodging €10,000 for a year in an instant-access account, where the money can be withdrawn without notice and with no penalty imposed.

It compared the return before DIRT (deposit interest retention tax) at 41pc has to be paid.

The survey found that Bank of Ireland had one of the worst rates. It gives savers €1 for a €10,000 deposit. This is because its interest rate on its demand deposit account is just 0.01pc.

The same rate of return is given by Permanent TSB.

AIB pays 0.05pc. This means €10,000 will generate just €5 after a year at AIB.

The best rates are on offer from Belgium-owned KBC Bank and Nationwide UK (Ireland), both offering 1.15pc over a year,and RaboDirect, paying 1.25pc. A Bank of Ireland spokesman said it offered higher returns to savers who used online banking.

Irish Independent

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