As interest rates increase, the battle to win new deposits is gathering momentum with the notable introduction of the ‘Interest First’ account from Permanent TSB. Unlike it’s competitors, it gives the entire year’s interest back to the depositor in the first month – and the rate is competitive at 3.35% Gross/3.46% AER*.
Account with a difference
Within the Irish market at present, Anglo Irish, Nationwide, EBS & Ulster Bank offer 1 year fixed rates from between 3.35% Gross/AER to 3.5% Gross/AER but interest is only applied to these accounts at the end of the 12 month term. Between now and then we will encounter back-to-school expenses, Christmas and next year’s summer holidays.
Any of the accounts listed above means you will not see the deposit interest applied until 26th August 2011 at the earliest if you open an account today. So if you need a cash injection between now and then, the Interest First account makes sense.
Example:
Depositor with €100,000 opens up an Interest First account with Permanent TSB. After 30 days, they will receive a cheque for €2512.50 which they can place in an instant access account, pay off a bill or spend as they see fit.
That same depositor could opt to open up a 1 year fixed account with Anglo Irish Bank which has a marginally higher rate at 3.5% Gross/AER. Net interest of €2625.00 is applied after 12 months – a difference of just €112.50.
Term
There is no access to your money over the 12 month term with Permanent TSB, and while Anglo will allow a withdrawal, the interest rate will fall to a measly 1% if this happens. The minimum lodgement into an Interest First account is €10,000 with the maximum €1,000,000.
For more information on how to open up an Interest First account, email bob@myrecession.ie.
*AER Explained:
AER stands for Annual Equivalent Rate and shows the rate of interest a saver will earn over a 12 month period assuming the entire cash amount is left in the account for the entire year.
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