BY JOHN ELLIS, FINANCIAL ADVISOR
In a bid to attract a portion of the €156 billion currently on deposit in Ireland, Dutch online bank Bunq has announced a substantial increase in its savings rate. From July 19 Bunq has increased the interest rate on its ‘Easy Savings’ account to 3.36% for new customers. This is a significant jump from the previous 2.46% rate and stands as one of the best rates currently available in Ireland incentivising many to reconsider where they deposit their money.
One of the standout features of these savings account is the frequency of interest payouts. Unlike other accounts that pay interest quarterly or annually, Bunq pays out interest weekly. This allows savers to benefit from compound interest more frequently, potentially accelerating their savings growth. Through their App, top ups can be completed quickly and easily. Additionally, customers may make two instant withdrawals per month, providing flexibility and easy access to their funds.
The bank is fully licensed in the Netherlands, and all deposits are guaranteed up to €100,000 under the Dutch Deposit Guarantee Scheme but it’s a pity that loyalty is rarely rewarded; existing customers rate will slightly decrease to 2.16%, but additional deposits will earn the new 3.36% rate. However, if customers have made recent withdrawals, the higher rate will only apply once their account balance surpasses the previous highest balance recorded between January and June of this year.
The more competition the better and so it is great to see the Irish banks increasing their savings rates despite the ECB beginning to cut rates in June. For example, Bank of Ireland has raised the rate on two of its fixed-term deposit accounts, with its two-year fixed-term Advantage account now offering 3% annually.
Online-only banks like N26 and Revolut have also introduced competitive instant-access savings accounts. Revolut offers 2% for standard account holders and up to 3.49% for those with an ‘Ultra’ subscription. Meanwhile, N26 offers 2.80% for standard account holders and up to 4% for those with a ‘Metal’ subscription. However, ECB rates are likely to be cut again later this year, great for mortgage holders but the higher savings rates now available might not last long.
It is crucial to review all available options to ensure your money works as hard as you. Your financial advisor and platforms like Bonkers.ie offer savings comparison tools to help you compare rates from various providers, including AIB, Bank of Ireland, PTSB, Trade Republic, Raisin, Bunq, N26, and more.
For those with longer-term savings goals, considering a life assurance investment policy with providers like Irish Life, Zurich, or Aviva might be beneficial. These managed funds invest in a mix of stocks, commodities, property, and bonds, offering the potential for higher returns.
Contributions can start from as little as €100 a month, or you can invest a lump sum starting around €10,000. It is important to be aware of taxes, fees, and the lack of instant access to these funds. Life assurance exit tax at 41%, a 1% stamp duty, and fund management fees ranging from 1% to 2% annually can impact overall returns. Market performance is an issue and there is a risk of not getting back some or all of your original capital.
With the rise in competition among banks and varying interest rates, savers should stay informed and proactive about their options. Contacting a financial advisor and/or utilising online comparison tools you will find the best value for your money and ensure your savings are optimally positioned for growth.
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