Anyone understand exactly how the AIB savings accounts work, in contrast to their fixed term accounts?

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BrokeBroker

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I know there are other options for fixed term accounts (raisin?), but for some reason I just feel more secure with my money in an Irish regulated institution.

AIB is quite competitive at the moment, 1) online saver (2%) and 2) fixed term accounts (1.5% for 12 months).

Thing is, I already have an online saver, but I don't think the new interest rate applies to its contents.

It only applies to what is deposited each month, from now.

So......... what is the strategy here, open a second online save and transfer by standing order the max amount (1000 per month) into it, from the current savings account?

Then after 12 months, that 2% applies to...... this is the part my brain is having difficulty computing:

So:

It applies to the full amount in the account each month?

Month 1: 1000 + 2% = 1020 total
Month 2: 2020 + 2% = 2060 total (2% applying to full amount)
Month 3: 3060 + 2% = 3121 total
Month 4: 4121 + 2% = 4203 total
Month 5: 5203 + 2% = 5307 total
etc

Or just each deposit per month (i.e. each 1000):

Month 1: 1000 + 2% = 1020 total
Month 2: 1000 +2% + the last amount = 2040 total.
Month 3: 1000 + 2% + the last amount = 3060 total.
Month 4: 1000 + 2% + the last amount = 4080 total.
etc

See the difference?

So by month 12 and the total amount deposited = 12,000

The amount with interest should be a) what that progress cumulates at at month 12, or b) 12,240 euro (2% of 12,000)?

.......

Where as the fixed term at 1.5% on the same hypothetical amount, 12,000 = 12,180

......

Anyone follow that logic?
 
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Interest rates are generally quoted annually.

1000 for a month at 2% interest is 20/12 = 1.66 per month approx.
 
That AIB account is a pile of dung and far more trouble than it is worth. Unlike regular saver in BOI and PTSB, the amount on which the headline interest is payable resets to €1,000 in the first month of the second year. And while RedOnion's interest calculation of €120 is technically correct, after DIRT this reduces to €80. And that's before you factor in any bank charges.

If you had a GoalSaver with BOI you could deposit up to €2,000 per month and leave the balance grow to €15,000 and then reduce your monthly deposit to €20 - the headline interest rate will continued to be paid on the full €15,000 indefinitely. Likewise, you could lodge €1,000 per month to a PTSB Online Regular Saver until the balance reached €49,000 and then reduce your monthly deposit to €20 - the headline interest rate will continued to be paid on the full €49,000 indefinitely. (Just note that the balance in this account must NEVER exceed €50,000 or you loose the headline interest rate). While the BOI and PTSB accounts have a lower nominal rate, the fact that neither have that stupid AIB annual "reset to zero stunt" means they are a lot less hassle and more profitable in the long run. And in the case of BOI you can open two Goal Saver Accounts.

It goes without saying that Raisin, BUNQ and others offer far far more attractive rates but you appear to have ruled those out.
 
Freelance said:
It goes without saying that Raisin, BUNQ and others offer far far more attractive rates but you appear to have ruled those out.
Click to expand...

Do many people use those?

It just seems like a risk in my mind to have that amount of money in an account that's not regulated by some kind of Irish authority?

i.e. if things go sideways, where's muh money? (same reason I wouldn't invest in crypto).
 
The fixed term deposits for AIB versus permanent TSB versus BOI;

Most seem to be at 1.5% for 12 or 18 months?

Is DIRT applicable to all or any of them?

Where as the fixed term at 1.5% on the same amount, 12,000 = 12,180
Click to expand...

I am correct in saying this?
 
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DIRT is applicable on all interest from savings and deposit accounts
Irish banks will deduct it automatically
Foreign banks don't, but you have to include the amount of interest on a tax return and pay the DIRT yourself
 
BrokeBroker said:
The fixed term deposits for AIB versus permanent TSB versus BOI;

Most seem to be at 1.5% for 12 or 18 months?

Is DIRT applicable to all or any of them?
Click to expand...
DIRT is applicable to practically all deposit interest and usually deducted at source.
BrokeBroker said:
> Where as the fixed term at 1.5% on the same amount, 12,000 = 12,180

I am correct in saying this?
Click to expand...
That's the gross return.
€12k @ 1.5% = €180 interest.
After DIRT @ 33% it's €120.60.
Bear in mind that inflation is much higher so your money is effectively losing value.
 
ClubMan said:
DIRT is applicable to practically all deposit interest and usually deducted at source.

That's the gross return.
€12k @ 1.5% = €180 interest.
After DIRT @ 33% it's €120.60.
Bear in mind that inflation is much higher so your money is effectively losing value.
Click to expand...

I'm a newbie and basically want an improved interest rate in an Irish bank.

AIB 12 month fixed term at 1.5% would be my best option currently?

pTSB are doing 1.5% for 18 months.

Is there any advantage to going with an institution not AIB for my purposes?

Cheers (question directed at anyone who knows, really).
 
Freelance said:
That AIB account is a pile of dung and far more trouble than it is worth. Unlike regular saver in BOI and PTSB, the amount on which the headline interest is payable resets to €1,000 in the first month of the second year. And while RedOnion's interest calculation of €120 is technically correct, after DIRT this reduces to €80. And that's before you factor in any bank charges.

If you had a GoalSaver with BOI you could deposit up to €2,000 per month and leave the balance grow to €15,000 and then reduce your monthly deposit to €20 - the headline interest rate will continued to be paid on the full €15,000 indefinitely. Likewise, you could lodge €1,000 per month to a PTSB Online Regular Saver until the balance reached €49,000 and then reduce your monthly deposit to €20 - the headline interest rate will continued to be paid on the full €49,000 indefinitely. (Just note that the balance in this account must NEVER exceed €50,000 or you loose the headline interest rate). While the BOI and PTSB accounts have a lower nominal rate, the fact that neither have that stupid AIB annual "reset to zero stunt" means they are a lot less hassle and more profitable in the long run. And in the case of BOI you can open two Goal Saver Accounts.

It goes without saying that Raisin, BUNQ and others offer far far more attractive rates but you appear to have ruled those out.
Click to expand...

As you've done the math already, is this approach more advantageous than opening a fixed term deposit account at 1.5% for, whatever term?

The "headline interest" as you say, in pTSB and BOI is 1% only?

At the 12 month period with AIB when the account matures, it needs to be reinvested, but can be done at whatever the interest rate at that point is.
The difficulty being you need be basically organize that at the appropriate time.

Anyone have thoughts/perspectives on this?


PS - fixed term of deposit savings accounts, they come with maintenance fees or additional fees of some kind?
 
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BrokeBroker said:
I'm a newbie and basically want an improved interest rate in an Irish bank.

AIB 12 month fixed term at 1.5% would be my best option currently?

pTSB are doing 1.5% for 18 months.

Is there any advantage to going with an institution not AIB for my purposes?

Cheers (question directed at anyone who knows, really).
Click to expand...
They're are much better deposit rates on offer elsewhere but you seem to be dismissing them for some reason.
 
ClubMan said:
They're are much better deposit rates on offer elsewhere but you seem to be dismissing them for some reason.
Click to expand...

Are we talking through Raisin?

Reason being, googling them through trustpilot, it seems like a lot of hassle and some very unhappy customers?

Evidenced in posts here also, like this:

Unable to log into Raisin.ie

When I try to log on to Raisin - it takes email and password, and correctly goes to IBAN page, but before I can proceed it immediately reverts to login page. Have tried on Chrome and Edge browsers, same issue. Anyone else have this issue?
www.askaboutmoney.com

Agreed that the lack of communication on the Raisin.ie outage is shocking. They don't seem to care much - are they even aware? The company seems focused on their German product.
Click to expand...

Made yesterday :oops:

@ClubMan So there are better interest rates available elsewhere, but without the security of a local bricks and mortar institution.

It appears I'm not the only poster that has this concern.
 
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