A tighter belt is the new financial fashion – or at least we like to talk about it. In practice, most of us are burning through our euros to keep pace with rising costs, while doing very little to make the cash we have work for us. s82bn currently sits in Irish accounts. Derek Keogh, head of personal savings at Anglo Irish Bank, estimates that almost half of that money only earns an average of roughly one per cent in annual interest. Of course, that’s marginally better than the 0.0 per cent interest you’ll pick up by lodging your money under the bed, but deals for regular savers in Irish institutions – some paying up to eight per cent interest annually – leave the measly return offered by most current accounts far behind. So why aren’t more people jumping on the bandwagon? Well, the answer has a lot to do with inertia (yes, that’s a polite way of saying ‘laziness’!) and fear.

 

Getting your backside in gear to look for a savings account that suits your needs and setting it up is a chore: you’re probably working harder than ever, or looking frantically for work, and worrying about money more than you used to. Thinking about your cash any more than you need to isn’t fun right now. But in this case, it pays.
Think about it: consumer inflation – the pace at which prices are rising for day-to-day goods – may be slowing down a tad (simply because people aren’t splurging like they used to) but it still exists, eating into the value of your cash daily. Just look at your bill for Christmas – unless you’ve been remarkably thrifty, it’s probably gone up since last year. Now imagine it in a year’s time. Five years from now, you’ll be pining for the days that the holiday bottle of whiskey only cost you s25. 
This inflation explains why having your money earn no interest is a mug’s game: the value of your cash is corroded unless you make it grow. And there are risk-free opportunities to do just that through ‘regular saver’ deals. Banks and other institutions, keen to get a bit more cash on their balance sheets, are slugging it out for people who can commit a certain amount of cash to an account every month. Rather than blasting us frazzled consumers with TV ads, most institutions are going the old-fashioned route of simply offering a great rate of interest. “We have focused on a simple business model over the years,” says Keogh, describing Anglo Irish Bank’s current eight per cent deal for regular savers. “We pay a competitive rate, keep our products simple and provide superior personal service.” You can check out some of the best rates on offer in Ireland on MoneyMate’s table (see page 40). It’s very easy to find an account that will keep your money safe from inflation by paying a high rate.   

 

Safety, of course, is another factor, and anyone watching the financial world seemingly implode on their TV screens is probably tempted to stuff whatever money they have under the bed – if they’re feeling flush, they may use a fire safe. However, this paranoid approach misses a trick, as it ignores the significant moves made by the Government to shore up Irish banks late in 2008.
The Government’s bank guarantee scheme, which the six largest financial institutions in Ireland signed up to, means that Irish taxpayers guarantee all the loans, liabilities and deposits of the banks covered. AIB, Bank of Ireland, Anglo Irish Bank, EBS Building Society, Irish Life & Permanent and the Irish Nationwide Building Society are now effectively backed up by you. Short of a Zimbabwe-esque collapse in the Irish public finances, the money you stash in these institutions is as safe as anywhere. Of course, if this kind of catastrophic breakdown occurs, any money you have stashed away in the safe will be just as useless as your cash on deposit – you’ll have much more than your s500-a-month nest egg to worry about!

 

Thus, even if you believe that the end is nigh for Western capitalism and that money will be wiped out as we know it, you’ve very little to lose from saving it while it exists. Of course, if you’re taking a more rounded view, the benefits of getting a good rate of return for your money should be obvious. You’d also think that the right account for you would be just as obvious from a glance at the information compiled on this page. Well, not quite.
Different accounts have different rates of interest, certainly – they also have different conditions. Most regular saver deals will only allow you to commit a certain maximum amount of money to the account a month, while some will look for a minimum monthly lodgement to make setting up the account worthwhile. To pick the right account, you’ll need to look at both the rate of interest on offer and the conditions. If you can meet the requirements of the highest-paying account, then great – if not, then there should be something else on offer from another institution that suits you. If you’re lucky enough to have a sizeable tranche of disposable money you can commit every month, or want to get that big lump sum working harder, it’s a good idea to sign up to a few: there’s more legwork, certainly, and more paper wasted, but it gives you flexibility to make the absolute most of your cash without taking investment risk. Happy saving!

 

 

Quite simply, the banks don’t want to waste their time setting up an account that pulls in 50 cent a month, and they don’t want to be paying such high rates of interest on a huge wad of cash either. That’s why they set maximum and minimum monthly contribution levels for anyone who wants to avail of regular saver offers, allowing them to have some control on the amount that comes into the account every month. 

 

Get past the jargon of savings accounts with our mini-explainer.
AER: This stands for Annual Equivalent Rate. Simply put, this is the annual rate of interest that your money will earn in an account.
DIRT: Deposit Income Retention Tax (DIRT) was introduced in the 1980s. It takes a slice (23 per cent since the recent budget) out of the interest that your money earns in a deposit account.
Documentation: To ensure that you’re not operating a money-laundering scam, financial institutions are legally obliged to request proof of identification (such as a passport) and two separate items that prove your address. Typically, this proof of address can be a utility bill or a bank statement, and both items need to come from separate sources.