CONSUMERS are missing out on an estimated €1 billion in lost interest payments by leaving their savings in low earning bank accounts.
New figures have shown how someone who has €5,000 in savings could make as much as €175 in annual interest with a fixed term reward account.
However many savers are leaving their cash in low interest overnight accounts and missing out on such rewards.
Irish households have just over €37bn in low interest overnight accounts, according to figures from price comparison website, bonkers.ie.
On average, overnight accounts earn an interest rate of just 0.63% but if the money was transferred to the highest earning account then savers would earn a total of €1.1bn in extra interest.
Bonkers.ie said that banks are now offering “exceptional interest rates” in a scramble to meet capital requirements but many Irish savers are failing to take advantage.
Managing director of bonkers.ie, David Kerr warned, however, that interest rates 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. Once the banks have met the Financial Regulator’s requirements, we can expect interest rates to fall,” he said.
Meanwhile, a review of mortgages by the Central Bank and the Financial Regulator found that banks need to improve lending standards for first time buyers. They said there are concerns that, in some instances, banks are not utilising “robust and reliable risk measures when developing new mortgage lending strategies or mortgage products”.
Director of the Irish Mortgage Corporation, Frank Conway said the Central Bank is basically saying banks must never again be allowed to get to a stage where they act more like mobile phone providers seeking to grab market share and less like what they really should be — banks, with risk as their central guiding philosophy.
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