Irish banks are ‘ripping off’ consumers

IRISH consumers are being ripped-off by Irish banks who are charging a third more interest on overdrafts and credit cards than the average rate imposed by banks across Europe.

In a historic move the Central Bank and Financial Services Authority of Ireland yesterday with the European Central Bank published a new series of retail interest rate statistics for the eurozone area for the period January to September, 2003. The figures reveal pluses and minuses for customers of Irish financial institutions with mortgage payers faring better than the eurozone average, but deposit account holders, credit card users and the holders of overdrafts all faring far worse that their European counterparts.

Every month since January the Central Bank surveyed 17 banks representing the largest institutions within the relevant loan and deposit categories in Ireland. This information forms the basis for the Irish segment of the pan-Eurozone survey and takes into account hidden and extra charges also. The most glaring anomaly came in the overdraft and credit card interest rates charged to ordinary non-business borrowers on the 2 billion they owe Irish banks.

Despite interest rate cuts by the European central banks in March and June, Irish banks actually increased the interest rate imposed on the joint category of overdraft and credit card holders from 12.77% in January to 12.84% in September.

The 12.84% interest rate in September compares to the eurozone average of just 9.75%.

Irish businesses with overdrafts are also paying through the nose in comparison to their European counterparts, but are being charged almost half - 6.69% - for overdrafts than personal account holders. This is still well ahead of the 5.46% eurozone businesses are charged for similar products.

Irish mortgage holders are getting a slightly better deal by European standards from Irish financial institutions. In September the interest rate payable on mortgages paying a floating rate was 3.53% in Ireland compared to the eurozone average of 3.63%.

Irish personal deposit account holders with immediate access to their money are paid just 0.91% a year on the 26bn they hold in their accounts, a far cry from the 12.84% average charge for overdrafts and credits cards.