Home Personal Finance The AIB hike causes savings rates to hit 10-year highs as interest...

The AIB hike causes savings rates to hit 10-year highs as interest paid to savers is doubled

The AIB hike causes savings rates to hit 10-year highs as interest paid to savers is doubled

AIB and its subsidiary EBS pay 2 pc as of this week. in a number of deposit accounts Irish independent has learned.

This is up from 1%, with experts pointing out that it’s been more than a decade since savings rates hit 2%.

The move is likely to force Bank of Ireland and Permanent TSB to respond.

Banks in this country have so far faced huge criticism for passing on only a fraction of the European Central Bank’s seven rate hikes to savers. There is about €151 billion in household savings at the three retail banks and credit unions, which have been little or nothing earned for years.

AIB, run by Colin Hunt, will announce that it is raising the savings rate to 2% on both AIB and EBS regular savings offerings.

It raises the rate to 1.5 pc. on the AIB offer with a fixed term of one year for personal and business customers.

AIB Junior, AIB Student Saver rates and EBS Family Savings rates also increase to 2st. The EBS Child and Teen savings rates will increase to 1.50st.

The EBS Family Saver account will double its rate to 2% in the first year.

All rate changes take effect immediately.

The bank said its savings and deposit products can be accessed through the AIB Mobile App, online or in a branch.

Jim O’Keeffe, general manager of AIB retail banking, said the bank will continue to review its deposit rates and product offerings.

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The fact that banks have so far failed to pass on all of the ECB’s rate hikes means that savers have been shortchanged, consumer advocates argue.

Banks have used the €151 billion in household savings to subsidize mortgage interest deductions, allowing the banks to compete with each other for mortgage business.

Central bank governor Gabriel Makhlouf called this out in April when he told TDs and senators that Irish banks make about €1.8 billion a year by placing deposits from households and businesses with the European Central Bank (ECB), where the deposit rate is currently 3.25 percent. .

He said they used money from depositors to subsidize mortgage holders.

The Bank of Ireland raised interest rates for depositors twice this year and Permanent TSB raised savings rates three times recently. But they are now lower than those of AIB Group.

The interest on a number of new government savings rose for the first time in 16 years in March.

These An Post products are largely tax-free, but experts said the rates offered are low despite the recent increase.

Figures from the central bank show that this country has one of the lowest savings rates compared to the rest of the eurozone.

Daragh Cassidy of price comparison site Bonkers.ie said AIB has come under intense pressure to raise deposit rates.

He said Irish banks could still offer higher rates, pointing out that people who sign up for European savings platform Trade Republic can get 2% on amounts up to €50,000.

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