Bank of Ireland cuts savings rates in move expected to be followed by others

Bank of Ireland Adjusts Fixed-Term Deposit Rates in Response to Market Shifts

Bank of Ireland has announced adjustments to its fixed-term deposit rates, citing recent changes in key interest rates set by the European Central Bank (ECB). The move comes as Irish savers navigate a rapidly changing landscape of savings options.

Rate Adjustments for 12 adn 18-Month Deposits

Starting January 9th, 2025, the interest rates on the bank’s 12 and 18-month fixed-term deposit accounts will be reduced by 0.25 percentage points.

This adjustment means the annual equivalent rate (AER) on the Advantage 12-month fixed-term savings account will decrease from 2.5% to 2.25%. Similarly, the AER on the Advantage 18-month fixed-rate product will drop from 2.98% to 2.73%.

Customers who have already initiated the request process for either of these deposit accounts can still secure the existing rates if their accounts are opened by January 8th, 2025.

Importantly, the interest rate for the Advantage 6-month fixed-term deposit remains unchanged.

No Changes to Other Deposit Products

Bank of ireland has confirmed that there will be no changes to the interest rates on its other deposit products, including SuperSaver, Notice, and instant Access Demand accounts.

savings Rates in Ireland: A shifting landscape

The adjustments made by Bank of Ireland follow recent moves by major digital banks, which have been aggressively cutting interest rates on savings accounts. This trend, fueled by ECB rate cuts, is forcing conventional institutions like Bank of Ireland to recalibrate their offerings.

Revolut’s Impact and Bank of ireland’s Response

Digital bank Revolut recently slashed its interest rates, triggering a wave of changes across the Irish banking sector.

“This is a wake-up call for savers,” remarked one financial expert. “The era of high savings rates is seemingly over, and Irish banks are being forced to adjust.”

Irish Banks Expected to Slash Savings Rates

Analysts predict that other Irish banks will follow suit, reducing interest rates on savings accounts in response to the ECB’s actions and the competitive pressure from digital banks.

ECB Rate Cuts Triggering a Chain Reaction

The ECB’s decision to cut key interest rates has set off a chain reaction across the Eurozone, wiht banks adjusting their lending and deposit rates to reflect the new economic reality.

irish Banks Expected to Follow Suit

Industry insiders anticipate that other Irish banks will soon announce similar rate adjustments to their fixed-term deposit offerings.

What are the Implications of Bank of Ireland’s Decision to Reduce Interest Rates on Fixed-Term Deposits?

The Bank of Ireland’s decision has significant implications for savers who rely on fixed-term deposits for a guaranteed return on their investments. The reduced interest rates mean that savers will earn less on their deposits, potentially impacting their financial planning.

It remains to be seen how other Irish banks will respond to these developments, but it is clear that the landscape of savings rates in Ireland is undergoing a significant conversion.

Irish Savers Face Rate Reductions as Online and Traditional Banks Adjust

Irish households holding nearly €160 billion in deposit accounts are facing a fresh wave of interest rate reductions, mirroring recent moves by online banking giants like Revolut and N26.

Revolut Shakes Up the Market, Then Rolls Back Rates

Earlier this year, Revolut, the popular digital bank with a significant presence in Ireland, shook up the savings market by introducing a competitive 2% instant-access savings rate. This move prompted Bank of Ireland, one of Ireland’s largest traditional banks, to respond with two new deposit accounts offering rates of up to 3%. However,Revolut recently trimmed its savings rates by up to 0.4 percentage points, a decision that could disappoint its 3 million Irish customers. This adjustment follows similar reductions by German fintech competitor N26 in August.

A Call to action for Irish Savers

Daragh Cassidy, spokesperson for price comparison site Bonkers.ie, warns that these moves should serve as a “wake-up call” for Irish savers. “It’s crucial for people to take action with their money before rates fall further,” he advises. Cassidy’s warning comes at a time when many Irish savers are earning very little or no interest on their deposits.

Further Rate Cuts Expected as ECB continues to Ease Policy

Irish savers could see further reductions in interest rates on their deposits in the coming months, according to financial expert Daragh cassidy. He predicts that the European Central Bank (ECB) will continue to lower rates throughout 2025, following four rate cuts in 2024.

Chain Reaction of Rate Cuts

“Last year the ECB cut interest rates four times. And it’s likely it will cut rates another three or four times this year too,” Cassidy stated. This trend towards easier monetary policy has already prompted online banking giants Revolut and N26 to lower their savings and deposit rates. “And it was only a matter of time before the main Irish banks did the same,” Cassidy commented.

Traditional Banks Poised to Follow Suit

With online banks leading the way,Cassidy predicts that traditional Irish banks like PTSB and AIB will soon follow suit,potentially within the coming weeks. This move will likely impact savers who are already struggling with low interest rates, further emphasizing the challenges faced by those seeking to grow their savings in the current economic climate.

What are the implications of the Bank of ireland’s decision to reduce interest rates on fixed-term deposits?

The recent decision by Bank of Ireland to reduce interest rates on fixed-term deposits raises several vital questions for irish savers.

As banks react to the ECB’s policy changes and competition from online platforms intensifies, what strategies can savers employ to protect the value of their savings and potentially earn higher returns?

Bank of Ireland Adjusts Fixed-Term Deposit Rates: what it Means for Irish Savers

The Bank of Ireland recently announced adjustments to its fixed-term deposit rates, following a trend across the eurozone as banks align with the European Central Bank’s (ECB) monetary policies. These changes are prompting many to ask: what does this mean for Irish savers, particularly those who rely on fixed-term deposits for their savings?

Impact on savings Returns

“For savers, this means a reduction in the returns they can expect from their deposits,” explains Dr. Liam Murphy, economist and financial analyst. He points to specific examples: the annual equivalent rate (AER) on the 12-month fixed-term account will drop from 2.5% to 2.25%, while the 18-month account will decrease from 2.98% to 2.73%.

“While these changes may seem modest, they can add up over time, especially for those who depend on interest income,” cautions Dr. Murphy.

A Window of Possibility

However, there’s a silver lining for proactive savers. the Bank of Ireland is offering a brief window for customers to lock in the existing, higher rates if they act quickly. Accounts opened by January 8th will still benefit from these rates.

Strategic Decisions and Market Competition

Interestingly, the Bank of Ireland has chosen to leave the 6-month fixed-term deposit rate unchanged. Dr. Murphy sees this as a strategic move, noting that the 6-month deposit rate is often viewed as a more flexible option for savers who may not want to lock their funds away for longer periods.

“By keeping this rate unchanged, the bank is likely trying to balance its portfolio and attract customers who prioritize liquidity over higher returns. It’s also a strategic move to differentiate its product offerings in a competitive market,” he suggests.

Navigating the Broader Savings Landscape

The bank has also confirmed that other deposit products, such as SuperSaver, notice, and Instant Access Demand accounts, will remain unchanged. According to Dr. Murphy, this indicates that the Bank of Ireland is being selective in its adjustments.

“Products like Instant Access Demand accounts are designed for customers who value flexibility over higher interest rates. By leaving these rates unchanged, the bank is signaling its understanding of the diverse needs of Irish savers in today’s economic climate,” Dr. Murphy concludes.

Navigating ireland’s Shifting Savings Landscape

Irish savers are facing a dynamic and evolving surroundings as interest rates continue to fluctuate. With the European Central Bank (ECB) actively influencing monetary policy across the eurozone, finding the best way to grow savings has become more complex.

Expert Advice for Irish Savers

Dr. liam Murphy,a leading financial expert,emphasizes the importance of staying proactive and informed. “My advice would be to stay informed and proactive,” says Dr. Murphy.

He encourages savers considering fixed-term deposits to act quickly,noting that current rates are set to drop on January 9th.

Beyond fixed-term deposits, Dr.Murphy suggests exploring alternative savings options like notice accounts or even diversified investment portfolios. He stresses the importance of tailoring these choices to individual risk tolerance and financial goals.

staying Ahead of the Curve

Dr. Murphy also highlights the ongoing influence of the ECB on interest rates throughout the eurozone. He advises savers to keep a close eye on the ECB’s future decisions. “Don’t hesitate to consult with a financial advisor to ensure your savings strategy aligns with your long-term objectives,” he recommends.

What is the impact of the ECB’s recent interest rate cuts on fixed-term deposit rates in Ireland?

Interview with Dr. Liam Murphy, Economist and Financial Analyst, on Bank of Ireland’s Fixed-Term Deposit Rate Adjustments

Archyde News Editor (ANE): Dr. Murphy,thank you for joining us today. The bank of Ireland recently announced adjustments to its fixed-term deposit rates, reducing rates on 12 and 18-month accounts by 0.25 percentage points. What does this mean for Irish savers?

Dr. Liam Murphy (DLM): Thank you for having me. This decision is significant for Irish savers, notably those who rely on fixed-term deposits for predictable returns. the reduction in rates means that savers will earn less on their deposits. Such as,the Advantage 12-month fixed-term savings account will now offer an annual equivalent rate (AER) of 2.25%, down from 2.5%. Similarly, the 18-month account drops from 2.98% to 2.73%. This is a direct response to the European Central Bank’s (ECB) recent rate cuts and the competitive pressure from digital banks like Revolut.

ANE: how does this align with broader trends in the Eurozone banking sector?

DLM: This is part of a broader trend across the Eurozone. The ECB has been cutting key interest rates to stimulate economic growth, and banks are adjusting their deposit rates accordingly. Digital banks, which frequently enough lead the way in rate adjustments, have already made significant cuts. Revolut, as an example, reduced its savings rates by up to 0.4 percentage points.conventional banks like Bank of Ireland are now following suit to remain competitive and manage their margins.

ANE: What are the implications for savers who rely on fixed-term deposits for financial planning?

DLM: The implications are considerable. Fixed-term deposits are often chosen for their stability and guaranteed returns. With lower rates, savers will see reduced income from these accounts, which could impact their financial goals, whether that’s saving for a home, retirement, or other long-term plans. It’s a challenging environment, especially for those who depend on interest income to supplement their earnings.

ANE: With traditional banks like PTSB and AIB expected to follow Bank of Ireland’s lead, what strategies can savers employ to protect their savings?

DLM: Savers need to be proactive. First, they should shop around for the best rates available, even if it means considering online banks or credit unions. Diversifying savings across different types of accounts,such as notice accounts or instant-access accounts,can also help. Additionally, exploring alternative investment options, like government bonds or low-risk mutual funds, might provide better returns, though these come with their own risks. it’s crucial to review and adjust financial plans regularly to adapt to the changing landscape.

ANE: Do you think this trend of rate reductions will continue in the near future?

DLM: Unluckily, yes. The ECB has signaled further rate cuts in 2025, and banks will likely continue to adjust their deposit rates downward. this is part of a broader shift toward lower interest rates globally, driven by economic uncertainty and efforts to stimulate growth.Savers should prepare for a prolonged period of low returns on traditional savings products.

ANE: What advice would you give to Irish savers navigating this challenging environment?

DLM: My advice is to stay informed and flexible. Keep an eye on rate changes across different banks and financial institutions. Don’t hesitate to move your money if you find a better rate elsewhere.Consider consulting a financial advisor to explore options tailored to your specific needs and risk tolerance. And most importantly, don’t panic—while the current environment is tough, there are still ways to protect and grow your savings with careful planning.

ANE: Thank you, Dr. Murphy, for your insights. This is a critical issue for Irish savers, and your expertise has shed light on the path forward.

DLM: Thank you. It’s a challenging time, but with the right strategies, savers can still achieve their financial goals.