Charlie Weston: Grab a good savings rate while you can get one
THE smart money is on a major scaling back on the interest rates being paid on deposits in the coming months.
A deposit-rates war has been raging for two years now as banks and building societies desperately scramble to get funds into their depleted vaults.
So high have these rates been that deposit takers have been complaining that they are uneconomic and unsustainable, with an industry-wide adjustment urgently needed.
Indeed, AIB boss Colm Doherty went so far as to say recently that the competitive Irish deposit market was "completely detached from reality".
The bank argued that the deposit war had cost it €732m in lower deposit income.
Domestic banks will therefore have welcomed the move by South African bank Investec to cut the rate it pays on one-year fixed deposits, reported in this newspaper last week.
Investec was offering 3.6pc -- the highest in the market -- but that has been cut to 3pc.
Those lucky enough to have a few bob to squirrel away would be wise to take note of that move, which is expected to herald a marketwide cooling.
As sure as night follows day the rest of the deposit takers in the market are set to cut the savings rates they pay while at the same time hitting mortgage holders with higher interest rates, where they can.
What this means is that if you spot a good rate, then grab it. If that means locking your money away for a year, then so be it.
The best one-year fixed deal is now being offered by State-owned Anglo Irish Bank at 3.5pc. But this rate will fall to 1pc if you take any money out during the 12 months.
Irish Nationwide offers 3.5pc, but the minimum here is €20,000.
The best demand deposit rate is from Nationwide UK at 3.3pc. This is an internet or postal account.
For regular savers, EBS, Bank of Ireland and Permanent TSB all pay 4pc with monthly maximum deposits of €1,000.
Many people are worried about Anglo Irish, given that it is due to report massive losses this week.
It is worth noting that no depositors, either in the EU or the US, have lost a cent during the past two years of financial turmoil. Governments have ensured that deposits have been protected, even where banks collapsed.
Anglo is state-owned so even if it is closed down, and there is no plan to do so, it would be an orderly wind-down and you should be able to get your money out.