Savers warned to lock in before banks start cutting deposit rates

Consumers with funds they can put aside were told to lock into some of the better long-term fixed deposit rates still available on the market.

It comes after PTSB said it is increasing some of its deposit rates for consumer and business customers but cutting one of its longer-term savings rates.

The bank is increasing its one-year fixed rate by 0.75 percentage points to what it said is a market-leading 2.75pc.

It is also increasing its six-month fixed rate by 0.25 points to what it said was a market-leading 2pc. The new rates are designed to attract customers who are looking for a higher rate of return on shorter terms.

PTSB said this is the second increase it has announced in the six-month fixed rate in the past two months, following a 0.75 percentage point increase in March.

New bank to shake up the market

There is no change to the current 18-month and five-year fixed rates, which remain at 2.5pc and 2pc respectively.

But its three-year fixed rate is coming down to 2.1pc, a reduction of 0.9 points.

The rates quoted are annual equivalent rates.

New rates will take effect from next Tuesday, and are available to new and existing customers. The changes impact personal and business customers.

Daragh Cassidy, of price comparison site Bonkers.ie, said there has been a huge focus on when and by how much the ECB will cut interest rates over the coming months and the impact it will have on mortgage rates.

The rate the ECB pays banks that ­deposit money with it is currently 4pc.

But Mr Cassidy said that what many people forget is that it is also going to lead to reduced savings rates.

“So the news that PTSB is cutting one of its best fixed deposit rates from 3pc to 2.1pc isn’t overly surprising,” he said. “On the flip side, it’s welcome that PTSB is increasing its one-year rate to 2.75pc.”

I’d encourage anyone with money to look at locking into these rates while they’re still available

Some people are uncomfortable with locking their money away for long periods so this product should prove attractive to them. Rates of up to 3pc are still on offer from AIB and Bank of Ireland, Mr Cassidy added.

“I’d encourage anyone with money to look at locking into these rates while they’re still available,” he said.

“And of course, higher rates of over 3pc are on offer from the likes of Trade Republic and Raisin. N26 and Bunq also have good options for savers.”

Mr Cassidy said Irish savers are collectively missing out on billions of euro in interest a year by not putting their money into the best-yielding account.

“Now really is the time to do it before savings rates start to fall,” he said.

Recent figures show that bank deposits by Irish households rose to a new record of €153.6bn in February.

But despite the movement of €6bn in higher interest-paying accounts, some 90pc of Irish household deposits remain in accounts paying little in interest, figures from the Central Bank show.

Figures extracted from the ECB by independent economist Simon Barry show Irish households have now begun to respond to the higher interest rates available on term deposits.

A term deposit is an account for a fixed period of time that pays a set interest rate. The average interest rate available to Irish households for new term deposits in January was 2.51pc.

This is compared with the average rate paid on overnight balances of just 0.13pc, according to Central Bank of Ireland figures.