AIB and EBS raise interest rates for savers up to 3%

AIB is the last of the pillar banks to announce changes following increases from Bank of Ireland and Permanent TSB earlier this week

Following nine consecutive rate increases as part of the ECB's most aggressive interest rate campaign in history, banks have faced extensive criticism for not passing these rates onto consumers

AIB is the latest bank to increase rates for savers following moves this week from Bank of Ireland and Permanent TSB, with the lender and its subsidiary EBS introducing new rates of up to 3%.

From this month, AIB's Online Saver will offer returns of 3% on amounts between €10 to €1,000 per month for 12 months. Customers can open a maximum of four accounts, enabling them to earn 3% on amounts up to €48,000 a year. 

A rate of 0.25% applies after the monthly threshold of up to €1,000 is reached on each account.

The bank is also increasing all fixed term deposit rates for Personal and Business customers, raising the interest on its 2-year Term Deposit to 3%. Similarly, the rate on AIB's 1-year Term Deposit account is increasing to 2.50%, with its 6-month Term Deposit account increasing to 1.50%.

AIB Junior and Student Saver rates and the EBS Family Savings rate are also rising to 3%, with the EBS Children & Teens Savings rates being raised to 2.50%.

The AIB Online Notice 7 Deposit account is increasing to 0.75%, with the AIB Demand Deposit account and EBS Instant Access account rates increasing to 0.25%. 

AIB’s fixed rate changes will be available from 12 September, with all other rate changes available from 19 September.

“AIB is pleased to announce another significant increase on the returns to AIB and EBS savers across Regular Saver, AIB Fixed Term and Demand deposit products benefiting all of our deposit customers, said Elaine Downey, AIB’s Head of Products.

"We encourage all customers to review our savings and deposit offerings to see how they can earn more on their savings”.

Earlier this week, Bank of Ireland was the first of the three pillar banks to introduce a 3% rate on certain products as the sector comes under increasing pressure from the Government to raise rates for savers.

The move prompted Permanent TSB to also update its product offerings for savers, announcing on Wednesday a 3% return on its 3-year fixed-term deposit.

AIB is the last of the pillar banks to announce changes, with the latest announcement coming after more than a year of rate hikes by the European Central Bank, which AIB has benefitted extensively from.

Following nine consecutive rate increases as part of the ECB's most aggressive interest rate campaign in history, banks have faced criticism for not passing these rates onto consumers, with Standard and Poor reporting that Ireland had the lowest deposit rate gains out of the Eurozone, UK and US, with just 7% of interest rate hikes being passed on to savers.

Last week, Minister Simon Harris called the rates on offer for savers "offensive," adding that mortgage holders have been hit by increased rate hikes, while savers have not reaped any benefits.

In the past year, Irish mortgage rates have risen by just under 50% as of July 2023, according to figures from the Central Statistics Office.

In addition, Minister for Finance, Michael McGrath said last week he expected to see rates for savers and depositors rises in the next few weeks, while the Oireachtas finance committee set to challenge the pillar banks next month over their interest-rate policies.

Speaking this week to the Irish Examiner, Head of Communications at Bonkers.ie, Daragh Cassidy said increases were good news for savers, however he feared that rising rates could coincide with additional hikes on mortgage holders.

"I’d encourage anyone with large savings in a demand deposit account or current account to look at moving their money to a fixed-term savings account," Mr Cassidy added, "provided they don’t require access to the money in the short term of course."