Permanent TSB hikes its deposit rates to 3%

Permanent TSB (PTSB) has become the latest bank to hike its deposit rates in a move which will no doubt be welcomed by savers.

It comes on the back of a similar increase by Bank of Ireland earlier in the week and follows a huge increase in interest rates from the European Central Bank (ECB) over the past year.  

The move will likely put pressure on AIB to respond. 

Going up

PTSB is upping the rate on some of its fixed term accounts by between 0.25 and one percentage point, with a top rate of 3% now available.

For example its three-year fixed-term account will now pay 3% a year, up from 2% previously. 

And for those who wish to build up a lump sum, PTSB's Online Regular Saver account is now paying 2.50% on amounts up to €50,000 in total. 

This is the fifth time that PTBS has hiked its savings and deposit rates since last November. 

The new rates will come into effect from 26th September. 

Bank of Ireland also recently hiked some of its rates to 3%, which you can read about here. 

And you can compare all savings rates across all lenders right here on bonkers.ie.

Under pressure 

Over the past few weeks all the main banks in Ireland have announced big profits. As a result they've also come under huge political pressure to hike their savings rates. And it seems PTSB and BOI have caved in.

And while it's great to see savings rates creep up, the returns on offer are still well below the rate of inflation. And of course you’ll pay DIRT of 33% on any gains you make.

What's more, deposit rates of over 4% are now available in many countries throughout Europe. So the rates on offer from the main banks are still lower than in many other countries. 

However, on the flip side, the main Irish banks have been slow at passing on the recent ECB rate increases to their mortgage customers. This is why Ireland now has among the lowest mortgage rates in the Eurozone. 

While the ECB has hiked rates by 4.25 percentage points since last July, PTSB has only increased its fixed rates for mortgage customers by around two percentage points on average and its variable rates have only gone up by around one percentage point. It’s broadly similar with AIB. Meanwhile BOI has yet to hike its variable rates at all while its fixed rates for new customers have only gone up by 1.75 percentage points. 

In essence, savers have been subsidising mortgage customers over the past year. So if we want to have even higher savings rates it’ll likely come at the expense of higher mortgage rates.

Be careful what you wish for perhaps...

Alternatives to the main banks  

There are plenty of options for your savings other than the main banks. Check out our article on alternative savings options for more information.

We also recorded a podcast on alternative savings options if you’d prefer to sit back and listen instead - you can find that episode here!