RaboDirect Drops On Demand Rate - 2.25%

RaboDirect has dropped their on demand savings rate to 2.25%
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There is now a considerable difference from RaboDirect to Anglo who offer 4.75% (more than double the interest return to RaboDirect) for the same savings product.

fungus said:

RaboDirect has dropped their on demand savings rate to 2.25%
[broken link removed]

There is now a considerable difference from RaboDirect to Anglo who offer 4.75% (more than double the interest return to RaboDirect) for the same savings product.

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Hi Fungus,

Following your regular postings it seems that you may dislike us at RaboDirect and actively direct other posters to the highest rate on offer in the Irish market, while ignoring other aspects like terms and conditions, accessibility of your money, the rating and financial strength of the bank offering the product. That’s fine with me as people do have a different appetite to risk and return.

However, the only thing I ask of you, as a moderator is that you are fair and correct in your advice. Suggesting the Anglo product is the same as ours is factually untrue. The 4.75% on offer is only until 1 Jan 2010 after which the rate will drop, possibly to a minimum guaranteed ECB + 0.5%, which is 1.75% currently. Also, it’s only available on balances up to €100,000.

Criticism is fine, and I will do my best to respond to it, as the only General Manager of a Bank in Ireland who is active within Askaboutmoney. But you really should try to be more fair and complete in your advice to posters on this blog. I think this would be helpful to everyone.
rgds

Roel van Veggel
General Manager RaboDirect

Rabo,

having a go at somebody for highlighting how bad your rates are is not the best way fo defending them. A quick glance at the 'best buys' keypost shows how competitively poor your rates are now across the range. You say the Anglo product only pays 4.75% up to 100k, but fail to say they pay 4% up to a million. At the same time you suggest that 'possibly' drop back to ECB+.5% in 18 months, which at the moment is only .5% above your latest rate offer. Wow.

Methinks, you protest too much.....

The ECB decrease kicks in tomorrow so I expect other institutions to drop their rates over the coming days.

Of course low interest rates mean savings are exposed to the real danger of inflation. Anglo's rates seem unsustainable in the medium-term, but I'll certainly take advantage of them while they are there.

I don't think fungus is been unfair / misleading in any way. Okay in the literal sense they aren't the same product but I think since they are both on demand savings that most AAM users are happy to compare them in the same category.

Note that he didn't specifically say choose Anglo over Rabo he merely stated that there's a significant difference between the products in their interest rates.

No one disputes the safety and reassurance that Rabo offers though that edge is somewhat diminished since Anglo is owned by the public and I'm sure quite a few of us want to get something back for our tax money.

RaboDirect said:

However, the only thing I ask of you, as a moderator is that you are fair and correct in your advice. Suggesting the Anglo product is the same as ours is factually untrue. The 4.75% on offer is only until 1 Jan 2010 after which the rate will drop, possibly to a minimum guaranteed ECB + 0.5%, which is 1.75% currently. Also, it’s only available on balances up to €100,000.

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Alright I'm open to correction on this but since both products sport variable rates and the Rabo account doesn't even have any guarantee (not that I can find anyway), this is essentially a mute point as the Rabo rate could well be lower than the Anglo one in the future.

It's obvious that as of late Rabo is targetting people who want substantial safety as opposed to people desiring a good return and one might argue that in recent times the numbers of the former have swelled considerably though there is a reason the best buys thread is ordered by best return as opposed to safety.
Also:
-With interest rates nose diving people are certainly shopping around more even more so with the DIRT increase.
-There are alternatives for people looking for security and a better rate even if your excluding the nationalised / semi nationalised Irish banks (Anglo, AIB, BOI)... Northern Rock for instance guaranteed by HMT, Halifax via HBOS which is virtually owned by the British taxpayer, the newly arrived Nationwide UK backed by the British taxpayer...

If there are any posts which exhibit "dislike" in regards to Rabo than these are hints that Rabo needs to do better with the rate. The safety of Rabo is certainly a great asset though the weak rate is effectively compromising the potential market share that can be gained.

Firstly, thanks for the support above guys.

In response to the post ...

Hi Roel van Veggel,

I welcome your engagement in a conversation about your products.

Please see below responses.

RaboDirect said:

accessibility of your money,

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Both the Anglo product and your product are on demand. They are the same in this regard.

RaboDirect said:

the rating and financial strength of the bank offering the product. That’s fine with me as people do have a different appetite to risk and return.

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Anglo Irish offer a 100% state guarantee on all savings. I regard this as an excellent level of security. With regard to level of security of deposits, to me, both products are very similar.

RaboDirect said:

However, the only thing I ask of you, as a moderator is that you are fair and correct in your advice. Suggesting the Anglo product is the same as ours is factually untrue. The 4.75% on offer is only until 1 Jan 2010 after which the rate will drop, possibly to a minimum guaranteed ECB + 0.5%, which is 1.75% currently.

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This is factually untrue. Please recheck your facts. 4.75% is not on offer until 1 January 2010. It is a variable rate, which is the same as Rabo.

RaboDirect said:

Also, it’s only available on balances up to €100,000.

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True, but they also offer the best rate above 100,000 EUR. Anglo now offer 4% from 100,000 EUR to 1,000,000 EUR so Anglo also has the highest rate for larger deposits.

The best rate for anyone with under 1,000,000 EUR to deposit is Anglo. Granted, if the saver has well over 1,000,000 EUR they should consider other options.

RaboDirect said:

Following your regular postings it seems that you may dislike us at RaboDirect

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What I dislike is quite simply the low return you offer to those that deposit money with you.

Rabodirect -your shooting yourself in the foot.

MysticX said:

-There are alternatives for people looking for security and a better rate even if your excluding the nationalised / semi nationalised Irish banks (Anglo, AIB, BOI)... Northern Rock for instance guaranteed by HMT, Halifax via HBOS which is virtually owned by the British taxpayer, the newly arrived Nationwide UK backed by the British taxpayer...

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I second this! As a Rabo Direct account holder I can say that when I first opened an account about 3 years ago, I did so because their security was largely unmatched on the Irish market, while the interest earned was only slighlty lower than the best rates available.

Since then, things have significantly changed, and there are several state guaranteed and owned banks offering significantly higher rates (and let's not compare the fixed rates on offer by Rabo). Because of this I pretty much cleared out a significant sum of money from my Rabo account until such time as the rates become more competitive.

Fungus, thanks for your balanced reply. I appreciate that.

I'm aware we don't have the highest rate in the market at present, however it is also not the worst on demand rate out there by any means.

We are very up front about this and we even state on our website and in our new campaign that our rate is not the best on the market:
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I actually created a podcast to explain why our rates have decreased recently:
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As stated I do think it is important to compare both financial products in all its aspects and financial institutions fairly. And believe me, if we could offer higher rates we would. High rates together with all other benefits of our products and the safety of Rabo would make our life easy!

Unfortunately in the current climate there is no 'easy life' out there. You have to appreciate the fact that for banks to stay healthy they need to have an income. And if they want to prevent having to be bailed out by your tax money (and mine), they have to get the right balance between risk and return, income and costs.

RaboDirect is the only bank in Ireland that has not had to avail to any government support, bail out or recapitalisation. And that is not a coincidence, that is a reflection of prudent banking with realistic rates. Saving rates which are up to 4% above ECB benchmark rates are simply not sustainable and are loss making products. At the end of the day that does not help make the banking sector viable again, and does not help restore the core function of banking, namely getting the Irish economy moving again.

rgds
Roel

RaboDirect said:

Fungus, thanks for your balanced reply. I appreciate that.

I'm aware we don't have the highest rate in the market at present, however it is also not the worst on demand rate out there by any means.

We are very up front about this and we even state on our website and in our new campaign that our rate is not the best on the market:
[broken link removed]

I actually created a podcast to explain why our rates have decreased recently:
[broken link removed]

As stated I do think it is important to compare both financial products in all its aspects and financial institutions fairly. And believe me, if we could offer higher rates we would. High rates together with all other benefits of our products and the safety of Rabo would make our life easy!

Unfortunately in the current climate there is no 'easy life' out there. You have to appreciate the fact that for banks to stay healthy they need to have an income. And if they want to prevent having to be bailed out by your tax money (and mine), they have to get the right balance between risk and return, income and costs.

RaboDirect is the only bank in Ireland that has not had to avail to any government support, bail out or recapitalisation. And that is not a coincidence, that is a reflection of prudent banking with realistic rates. Saving rates which are up to 4% above ECB benchmark rates are simply not sustainable and are loss making products. At the end of the day that does not help make the banking sector viable again, and does not help restore the core function of banking, namely getting the Irish economy moving again.

rgds
Roel

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Well said Roel. You made a lot of sence with this post.
I have had an account with Rabo for 3 or 4 years and found service good. Have not used account in a year or more due to low rates, however this is a matter of choice for me. If another bank wants to lose money on my deposits with good security for me then happy days! You have made some very sensible points in post above.