bonkers.ie encourages Irish savers to claim their share of €1.1 billion in lost interest

Research reveals limited confidence in Irish banks

– bonkers.ie research reveals consumer attitudes towards saving
– Inaction earns savers a fraction of cash available
– Potential to extend government guarantee
– Consumer confidence in bank guarantee holds strong despite bank credit ratings

21.7.10: Banks are offering exceptional interest rates in a scramble to meet capital requirements but many Irish savers are failing to take advantage says bonkers.ie. Latest Central Bank figures show that Irish households could claim their share of €1.1 billion in lost interest on cash available in overnight and notice accounts, simply by switching to a better rate.

Despite the availability of high interest rates, Irish households still maintain €37.3 billion in overnight accounts earning just 0.63%. Moving this money to a high interest demand account at 3.1% could earn Irish savers an additional €922 million. Savers with notice accounts are doing better, but they are still leaving €168 million on the table by failing to take advantage of notice and easy access rates of up to 3.3%.*

David Kerr, Managing Director of bonkers.ie commented: “Interest rates this high are unlikely to last for much longer. Consumers should take advantage of them while they have the opportunity. Banks have to meet strict new capital requirements by the end of this year so they are actively looking for our cash and are prepared to pay us well for it.” He continued, “Once the banks have met the Financial Regulator’s requirements, we can expect interest rates to fall.”

Potential to extend government guarantee

63% of bonkers.ie users search for lump sum deposit accounts with a stated median amount of €20,000.

“The majority of our users are actively looking to deposit or transfer a lump sum” said Simon Moynihan, Communications Director with bonkers.ie.  “These savers can beat the expected fall in interest rates and extend the government’s unlimited deposit guarantee by opting for a fixed term deposit account. Any term deposit accounts opened before the guarantee scheme ends in December 2010 will be covered to the full value of the deposit for the duration of the term. Right now, savers can take advantage of one year term accounts with rates as high as 3.5% from Irish Nationwide.”

The Financial Regulator requires that Irish banks meet 8% core tier 1 capital by 31st December 2010. When capital requirements are achieved, it is expected to spark a fall in interest rates. The government’s unlimited deposit guarantee is set to end at the same time.

bonkers.ie research reveals that savers still show confidence in Irish banks 

Of the 3,541 consumers that searched for a new savings account on bonkers.ie in May 2010, just 32% stated that a bank’s credit rating was important to them. This figure remained consistent with consumers searching for all account types. 31% of regular savers and 33% of lump sum savers stated that bank credit ratings were important. The only notable increase was for savers searching for fixed term accounts of more than one year with 37% stating that bank credit ratings were important.

Saver confidence is short term

The majority of consumers searching for fixed term accounts were only prepared to lock their money away for short terms. 65% of savers searched for accounts with terms of one year or less.

Only 9% of customers searching for fixed terms opted to look at accounts with a commitment of five years or more. This is despite the availability of high interest fixed accounts from institutions with a strong perception of security like An Post’s Solidarity Bond and AAA rated Rabo Direct’s 10 Year Fixed Term account.

“While the government’s unlimited deposit guarantee scheme is in place, savers remain confident that their deposits are safe in Irish Banks, but confidence is limited and savers are unwilling to lock their cash away for the long term” said David Kerr. “With so much uncertainty in the job market and the economy right now, people feel they could need access to their savings and won’t commit to the long term.” 

bonkers.ie findings

– 3,541 savings searches conducted on bonkers.ie during May 2010.
– 1,135 (32%) stated that credit rating of banks was important when searching for a savings account.
– Of 3,541 savings searches conducted on bonkers.ie, 2,242 (63%) were for lump sum deposit accounts.
– Regular savers accounted for 1,229 (37%). The median monthly deposit amount stated by regular savers was €400.
– Of the 2,242 lump sum savers, 918 searched for fixed term accounts. Of these, 597 (65%) opted for terms of one year or less.

ENDS

About Bonkers.ie

Established in November 2009 Bonkers.ie is a free personal finance comparison service that allows people to compare electricity suppliers, savings accounts, current accounts, credit cards and personal loans.

The service was established by David Kerr and Simon Moynihan who have attained expertise and a combined 15 years experience in the UK price comparison space, the most mature price comparison market in the world.

bonkers.ie aims to empower people to find the best deal and make real savings for free. Additional products and comparisons will be added to bonkers.ie in the coming months.

Savers can now also get daily information on saving by following http://twitter.com/bonkers_ie and on Facebook http://www.facebook.com/bonkers.ie

Notes to Editors

References

Central Bank Money, Credit and Banking Statistics for May 2010

http://www.centralbank.ie/frame_main.asp?pg=sta_late.asp&nv=sta_nav.asp

Overnight/demand accounts: €37,321 million at 0.63% interest earns 235 million interest pa.

In a high interest demand account (Anglo Premium Demand 3.1%), this money could earn €1157 million.

Difference: €922 million

Notice accounts: €16,978 million at 2.31% interest earns €392 million pa.

With the best restricted savings account (Nationwide UK Easy Access Savings Account 3.3%), this money could earn €560 million.

Difference: €168 million

Irish Government Deposit Guarantee Scheme

Financial Regulator

New levels of capital required for Irish banks

http://www.financialregulator.ie/press-area/press-releases/Pages/FinancialRegulatorPublishesNewlevelsofCapitalRequiredforIrishBanks.aspx

Potential to extend deposit guarantee requires deposit to qualifying banks enrolled in the government deposit guarantee scheme.

*Accounts referenced

Anglo Irish Bank Premium Demand Account 3.1%.

Permanent TSB 35 Day Notice Account 3.1%

Nationwide UK Easy Access Savings Account 3.3%