N26 slashes its savings rates

All good things must come to an end as they say. 

And it looks like the relatively good savings and deposit rates that Irish savers have been enjoying of late will soon be no more. 

N26, the German online-only bank, has announced that it’s slashing its savings rates by up to 1.1 percentage points. Previously it offered its standard account holders a rate of 2.80% while those with a subscription to its top-tier 'Metal'  account could avail of 4%. 

But as of now, standard account holders who sign up to a savings account will only get 1.70% while 'Metal' customers will get 3%. Customers who were already saving with N26 will continue to get the old, higher rates until 1st October.    

Why are savings rates falling?     

Interest rates were increased by the European Central Bank (ECB) significantly between the summer of 2022 and this summer as inflation reached nearly 10%. Higher interest rates make borrowing more expensive, which restricts economic growth and consumer demand and helps bring inflation down. 

But with inflation now largely under control, the ECB has begun the process of easing interest rates. As have central banks in other jurisdictions.  

In June it cut rates by 0.25 percentage points and it’s likely that it’ll cut rates by a similar amount in September. A third cut could also take place in December.

While this is leading to downward movement in mortgage rates, much to the delight of prospective first-time buyers, the flip side is that it’s also leading to downward pressure on savings rates.   

Strong competition in recent months for savers’ money from the likes of Bunq, Raisin, Revolut and N26 itself has meant that rates in Ireland have held up well despite starting to fall in most other Eurozone countries. But this won’t last forever. 

N26 is the first major savings provider in Ireland to reduce its rates and it's likely a sign of things to come. It’s likely other providers will follow suit over the coming weeks, especially if the ECB does cut rates again later in the year.   

Your savings options       

Despite the reduction in rates by N26, there are still plenty of good options for your savings. For now at least. But they may not be around for much longer.

Bunq, the 'Dutch Revolut', is still offering 3.36% with its 'Easy Savings' account. While Raisin, the online savings platform, is offering up to 3.60% through some of its partner banks.

And Bank of Ireland recently increased the rate on two of its fixed-term deposit accounts. Its two-year fixed-term Advantage account now offers 3% a year. 

Irish households currently have over €150 billion resting on deposit. A record high. But the vast majority of the money is still in accounts that pay little to no interest. So think about locking into the higher rates while they’re still available.

Review all your options 

You can easily find the best return for your money on bonkers.ie. 

Use our savings comparison tool to compare rates from the likes of AIB, Bank of Ireland, PTSB, Trade Republic, Raisin, Bunq, N26 and more in just minutes. 

Or check out our in-depth article on some alternative savings options for your money.