PTSB increases deposit rates on two saver accounts but cuts another one

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 points increase in March.

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.

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The rates quoted are annual equivalent rates (AERs).

The new rates will take effect from next Tuesday, and are available to new and existing customers.

The changes impact personal and business customers.

PTSB said the latest changes mean it has increased personal deposit rates eight times since November 2022.

It said it will continue to keep deposit rates under review.

Earlier this week PTSB said its customer deposits stood at €23.3bn at the end of March.

This was an increase of €1bn, or 5pc, since March last year.

Deposits rose by €300m from the end of December alone, according to the bank, which is still majority owned by the State.

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

But a huge chunk of the savings are in low-paying accounts.

Irish consumers typically keep their money in on-demand accounts, where the typical interest being paid out is 0.13pc per year.

In March German online neobank, N26, began offering users in Ireland access to a higher yielding instant access savings account.

The Instant Savings feature will enable Irish based customers to earn up to 4pc interest a year on their savings. They have to have an N26 Metal account, which has a monthly fee.

N26 is the latest of a number of neobanks and fintechs, such as Bunq and Raisin, that have started offering customers in Ireland access to higher yielding savings accounts where their money is sent to locations elsewhere in Europe.

Last month it emerged that savers in this country shifted €6bn of their Irish bank deposits into higher-interest paying accounts in the last year.

The move to take money out of bank accounts that are paying little or nothing is in line with advice from personal finance experts.

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 European 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.