Latest news with #EoghanO'Hara
The Journal
18-05-2025
- Business
- The Journal
Irish bank customers losing out on windfall by keeping money in demand deposit accounts
CUSTOMERS WHO KEEP their savings in demand deposit accounts with Irish banks could be missing out on a significant windfall in interest payments. According to figures from the Central Statistics Office, Irish customers are currently keeping a cumulative total of €140 billion in demand deposit accounts with interest rates well below those available through Raisin, a free-to-use online savings platform . Interest rates offered by Irish demand deposit accounts aren't keeping pace with inflation. An analysis by savings platform Raisin found that accounts of this nature have yielded a relatively paltry 0.13% AER (annual equivalent rate) in interest on average this year. Irish bank customers lost a total of nearly €2.7 billion in purchasing power last year due to the same measly returns on their savings, and it's likely that you are currently leaving money on the table if you're keeping your savings in an Irish demand deposit account. Raisin is a platform that allows users to access the interest rates offered by over 25 trusted banks across Europe with just one log-in, meaning that you can make significantly more back on the lump sum that you've put away for a rainy day compared to Irish demand deposit accounts. Through Raisin, Irish customers can instead hold their savings in term deposit accounts offered by European banks, including those rated AAA by Standard & Poor's, including banks based in Germany, Luxembourg and Sweden. Term deposit accounts have delivered much higher returns so far this year, at roughly 2.43% AER on average. On the Raisin homepage, you can see exactly the kind of interest your savings could yield if you were to hold them in a European bank for a fixed term, such as five years. Advertisement Interest rates available to Raisin users Raisin Bank Raisin Bank For example, if you were to deposit €30,000 with German bank Aareal through Raisin Bank in a fixed-term five-year deposit account, at the end of the term you would have accumulated €4,125 in interest based on current interest rates. If you are looking at building up interest in a more short-term fashion, there are also banks which offer interest rates of roughly 2.5% on six-month term deposit accounts. Money held in these bank accounts is protected by the EU-wide Deposit Guarantee Scheme, which ensures that funds up to €100,000 per bank, per saver, are safeguarded. Raisin also offers access to demand deposit accounts, if you would prefer to shop around for a savings account that doesn't hold your money for a fixed term. You can explore the wide array of banks, deposit accounts and interest rates that are currently available to Raisin users here . Signing up for Raisin Bank is simple, requiring only one log-in and no fees whatsoever. Explore the options available to you and make the switch from a low-yield demand deposit account to a higher rate term deposit from over 20 trusted European banks. Eoghan O'Hara, Irish financial expert at Raisin Bank, warned that 'even with better offers out there, many are still accepting measly rates on their hard-earned savings. If you don't need access to your money for a while, consider locking it into a term deposit to get real value.' If you feel like your savings aren't doing as much for you as they should, visit Raisin and find out how you can get more out of your money. All interest rates are valid as of 18 May, 2025. Raisin Bank holds a full banking license under the German Banking Act (Kreditwesengesetz) under registration number 100112 and is supervised by the German Federal Supervisory Authority.
Irish Independent
05-05-2025
- Business
- Irish Independent
Silent squeeze of inflation the hidden threat to retirement planning as it eats away at our nest eggs
The issue is particularly acute for pensioners who have cash lump sums in the bank or are relying on their savings after leaving the workforce. Research carried out by online savings platform Raisin Bank found that if inflation stays at its current level of around 2pc in this country it would deflate a nest egg of €20,000 to just €16,600 in 10 years. The bank said inflation was a hidden threat to post-retirement planning. If inflation continues at the historical level it has been at for the past 50 years then €20,000 today would be worth just €13,000 in the next 10 years. The Ireland head of Raisin Bank, Eoghan O'Hara, said: 'Many Irish retirees receive lump sums or maintain cash savings accounts to help fund their lifestyle, cover healthcare costs, or prepare for unexpected expenses. 'But few realise how quickly inflation can shrink those savings unless they're earning a return that keeps up.' Mr O'Hara said that if left unprotected, even modest inflation can diminish the buying power of retirement lump sums or emergency funds meant to last years. He said workplace pensions are designed for long-term growth and can include inflation-linked elements. But cash savings, such as those held in low-interest demand deposit accounts, are far more vulnerable to inflation's silent squeeze. Inflation measures the rise in the cost of living over time. Even at a modest rate, inflation reduces the real value of your savings, making it vital to plan accordingly In Ireland, historical inflation rates over the past 50 years have averaged roughly 4.35pc year over year. The current economic policies of the European Central Bank aim to maintain a 2pc target. Mr O'Hara said: 'Even at a modest rate, inflation reduces the real value of your savings, making it vital to plan accordingly.' Statisticians at Raisin Bank used historical inflation rates and calculated that €100 today would be worth only €65 in 10 years. And the €100 would be worth just €43 in 20 years' time. However, under the 2pc target scenario, the decline is less severe. In that case, €100 will be worth €82 in 10 years, and €67 in 20 years. Mr O'Hara said this demonstrates how even small percentage differences compound over time, affecting retirement funds. He said that for those in their 30s and 40s, the challenge to retain value when building up retirement savings is even greater. With 26 to 36 years until retirement, inflation can dramatically alter expectations. A 30-year-old planning to retire at 66, experiencing a 4.35pc inflation rate, would see the purchasing power of €100 today shrink to around €21.5 by retirement. Mr O'Hara said taxation also plays a role in reducing post-inflation gains. In Ireland, Deposit Interest Retention Tax (Dirt) further diminishes real returns on savings accounts. When adjusted for tax, returns on low-yield savings can fall below inflation, leading to a loss in real value. This makes tax-efficient investment options within pension schemes even more critical, he said. Relying solely on low-return cash accounts is risky due to inflation's erosive effects. Instead, pensions and investments should be structured to deliver real, or inflation-adjusted, growth, Mr O'Hara said. Raisin Bank said average historical Dirt-corrected savings rates for term deposits are a full percentage point higher than the rates for demand deposits.
