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Savers hit as An Post cuts rates and Bonds

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Amounts that can be won on Prize Bonds have also been pared back

Amounts that can be won on Prize Bonds have also been pared back

Amounts that can be won on Prize Bonds have also been pared back

The National Treasury Management Agency (NTMA) has cut the interest rates on a string of State Savings products, in a move that is set to hit savers hard.

Amounts that can be won on Prize Bonds have also been pared back.

The savings products, which are sold by An Post, are popular because they pay some of the highest interest rates in the market, and most of them do not attract DIRT.

Banks are now paying savers at best just 0.01pc for demand deposits, with larger customers such as credit unions and pension funds having negative interest rates imposed on them by banks.

Credit unions have been restricting member savings to as low as €10,000 as they grapple with a surfeit of savings and weak demand for loans.

The new An Post Savings Scheme rates took effect from yesterday, the NTMA said.

However, the new lower rates will not affect those with existing Savings Certificates, Savings Bonds, Instalment Savings, and 10-Year National Solidarity Bonds.

But from February the fund for Prize Bonds will be smaller for those who have them.

Instead of two €1m top prizes a year for those with Prize Bonds, there will now be four €250,000 top prizes a year. This is an effective cut of €1m in the top prize.

An NTMA spokesman said: "The new rates reflect the reductions in interest rates in both sovereign bond yields and the retail savings market.

"State Savings interest rates were last adjusted in June/July 2016, with the exception of Prize Bonds where the rate fund was adjusted in August 2017."

Down

The rate on newly issued 10-Year National Solidarity Savings Bonds has gone from 16pc to 10pc, which is from 1.5pc in annual terms to 0.96pc

There are some €19bn invested in State Savings products, which includes the money in Prize Bonds.

When the money in the Post Office Savings Bank is included, the total comes to €22.7bn.

There is another €124bn in household savings in banks and credit unions.

Financial adviser John Lowe, the author of Money Doctors 2021, said that despite the cuts the State Savings Scheme products were still the best value in the market.


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