Irish people with €5,000 or more saved in their bank account have been issued with an urgent warning by finance experts.
File photo of an ATM in Dublin city centre(Image: Gareth Chaney/ Collins Photo Agency)
An urgent warning has been issued to anyone in Ireland with €5,000 sitting in their bank account. Experts say a “silent killer” could be quietly eating away at people’s savings without them even realising.
Personal finance expert Dan Malone said that people often go to extreme lengths to save a few quid on their weekly shop, but rarely give the same attention to the “pathetic” interest rates on their bank accounts.
The founder of honest.ie explained: “Our attitude towards where we keep our savings needs to change. We have no problem driving an extra five minutes to shop in a cheaper supermarket to save a few euro, but we are indifferent about whether our savings are in the right account.”
He stated that taking just five minutes to compare interest rates could add hundreds or even thousands of euro in interest over the years.
Dan added: “Too many people have cash sitting in accounts that have pathetic interest rates, and inflation will eat away at these savings in the long run.
“Let’s say that for the next ten years, you leave €5,000 sitting in an Irish account earning zero interest. After ten years, you’ll still see €5,000 in your account after ten years, so it looks like you have the same amount of money.
“But with inflation, your €5,000 might only be able to buy around €4,000 worth of goods in today’s money. So in reality, you’re really losing around €100 per year by keeping your cash in the wrong bank account, but most people don’t realise that because inflation is invisible – it doesn’t show up as a falling bank balance.”
Dan said that people have two choices – they can continue to bury their heads in the sand, or take a few minutes to shop around for a better rate.
Personal finance expert Dan Malone has warned savers of the invisible, silent killer that is eating people’s savings – inflation(Image: honest.ie)
He continued: “Thankfully, gone are the days when we had only a handful of banks to choose from. Now there are dozens of banks available to people, and the best options are currently outside of Ireland. Many EU banks now offer much better rates, and your savings would be just as safe because of EU deposit guarantees.”
Dan has launched comparison site honest.ie to help people better understand their saving options and to easily compare different accounts.
He said: “People are astonished when they compare bank accounts side by side and discover that there are much better options out there for their savings.”
The warning comes as Tanaiste Simon Harris recently acknowledged that Ireland is “lagging behind other countries when it comes to long term savings”.
Speaking in February, he said there is “approximately €170 billion on deposit in Irish bank accounts”, adding that while it shows Irish households are good at saving, “this money is, to be frank, sitting idle”.
He said: “It generates very little return for the people who are consciously trying to build that bit of security for themselves and their families.”
The Tanaiste said he plans to bring a framework for an incentivised savings scheme to Government in the first half of this year and intends to prioritise the issue during his time as Finance Minister.
He said: “I’m talking about people who are not uber wealthy by any manner or means, but people who are trying to put away a few bob at the end of the week, at the end of the month, either for their own futures to perhaps save for a deposit of a house, perhaps for their children’s futures, perhaps just for a rainy day in terms of their own household economy.
“And at the moment, quite frankly, they’re locked out of any meaningful participation in the investment scenario in Ireland, locked out by complexity, locked out by tax rules, locked out by the amount you’d have to invest to be able to benefit in any sort of meaningful way.”
Want to see more of the stories you love from the Irish Mirror? Making us your preferred source on Google means you’ll get more of our exclusives, top stories and must-read content straight away. To add Irish Mirror as a preferred source, simply click here.