Savers getting a tiny return as interest rates plummet
CONSUMERS are getting a fraction of the return on their savings compared to a year ago.
A survey by the Irish Independent has found that interest payments on a nest-egg of €10,000 have plummeted by up to 63pc since June 2013.
The worst fall occurred in the KBC Demand account, which now pays just €75 in interest, down a massive 63pc on the €200 it would have reaped in our survey last year.
The best value a consumer could get anywhere in 2013 on savings of €10,000 was €260 - but they still could have dipped into them if they needed.
However, falling interest rates mean that the best return this year has dropped to just €215 - and that's only if you lock them away for 12 months.
Bear in mind too that the taxman get 41pc of that in Deposit Interest Retention Tax (DIRT).
If you want to retain instant access to your money, the best yearly return you'll get on €10,000 is now €200 with a Permanent TSB Online Instant Access account - but that's only open to those with an online current account with them.
The highest generally-available returns on instant access accounts are €175 with KBC Smart Access Demand or RaboDirect Demand Deposit Account which both pay 1.75pc.
You would have been getting €260 in interest from the KBC account last year, according to our previous survey.
If you're prepared to lock up your money for a year, the best savings return currently on a €10,000 lump sum is €215 with Permanent TSB one-year fixed-term accounts with a 2.15pc interest rate.
KBC customers, meanwhile, would earn €205 on its 12-Month Deposit account or €200 on its Interest Upfront Savings account.
Personal finance expert James O'Donovan said that, depending who they banked with, many consumers would be better off putting some of their savings into their current account to slash bank charges.
Both AIB and Bank of Ireland waive most charges if you keep a minimum balance at all times.
Mr O'Donovan said he saved €200 a year in bank charges on his AIB account by keeping a minimum of €2,500 on deposit at all times.
"That's a return of nearly 10pc on that money which is a lot more than you'll get for it in a savings account," he said.
You can avoid routine charges with AIB each quarter if you keep a minimum balance of €2,500 in your account at all times - while doing this will also remove the need for a pricey overdraft facility.
Bank of Ireland waives transaction charges if you keep a minimum balance of €3,000 at all times, though it still charges a quarterly fee of €5.
Mr O'Donovan said that with interest rates below general inflation his view was that keeping savings on deposit was a "waste of money" at present.
Other options would be putting savings into managed funds with the potential for moderate rises or falls, or the higher-risk option of buying stocks, he said.
We carried out our savings price comparison using the National Consumer Agency's financial comparison tool on consumerhelp.ie.
For savings accounts with 30 days notice, the best return on €10,000 was with RaboDirect Notice Saver or Nationwide UK (Ireland) Notice Plus account which both pay 1.75pc or €175.