State Savings Rates Cut: Full Details

sebadoh said:
Banks were losing money on the rates that they were charging, its only over the last year that statev savings have become competitive. Disappointing to see rates cut with immediate effect. It is going to be very hard to get an account now that will keep ahead of inflation:mad:
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Agreed but inflation is dropping like a stone across Europe at the moment.
 
The old rate of 3.23% is NOW DOWN TO 2.28% - A CUT OF 0.95%.


STATE SAVINGS BONDS
  • 3 Years 3.23% (A normal deposit account would need to be paying *4.61% to match this rate because this product is not subject to DIRT at 30%.)
 
amadain said:
The old rate of 3.23% is NOW DOWN TO 2.28% - A CUT OF 0.95%.
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The scale of cuts are large. The NTMA rarely review rates, but when they do the movements can be significant.

The biggest drop, which the press release tries to hide, is the whopping 2.00% drop in the 30 day notice account to 1.00%.
 
I remember having a Deposit Account Plus account when it had a lower DIRT rate than the normal rate at the time - 1% now - joke!
 
Some further thoughts on these changes ...

It was poor practice by the NTMA to not give 2 months notice of the rate changes on their instant access and 30 day notice account. This is something that banks are required to do.

Also, the NTMA did not clearly state the comparable old AER for their instant access account and 30 day notice account in notices about the change. This is something that banks are required to do and is good practice.

There is no reason for anyone, who cares about a return on their money, to keep open the NTMA instant access or 30 day notice account.

The NTMA 3.00% for 30 day notice was propping up instant access, notice account and short term deposit market. Hence, rates are now likely to drop on banks deposit products.

The ball is now seems to be in PTSB's court to cut rates. PTSB have the highest regular saver, highest 1 year term deposit, highest children/teen savings rate and some of the highest notice account rates.
 
I agree with everything you say CiaranT and I am lucky that i managed to shift all my money from AIB Direct (was with Anglo and transferred over). I have a few thousand more I was going to put in the 5.5 cert - now its a 5 year cert but because of the rate drop I might go with the 10 year bond. Another problem we are now faced with is the PRSI from 2014 and not actually knowing how this is going to work. Maybe we could escape the PRSI if we only go with DIRT free products e.g. 3,5,6 year product and be hit on 4 and 10 year bond products but we just dont know. It's a totally unsatisfactory situation to be in.
 
Was standing at the counter this morning with forms filled out & bank draft in hand....
Couldn't believe it when they said rates had changed over the weekend...
Late as per usual to jump on the bandwagon..
 
I completed a 5.5yr certificate on Friday but they said that as it was a joint account that both myself & my wife's signature has to be witnessed on a anti money laundering form. I signed it but I was on my own and he gave me the receipt with the certificate number but asked me to tell my wife to pop in on Saturday to sign her form. She was not able to but will do so later this week, any thoughts on what rate I will get, presume the old rate as I got the certificate reference number on Friday?
 
Once you have the green official receipt and your wife signs her form as promised you will get the old rate.
 
Commiserations to those who didn't or weren't in a position to fill their boots before the cut.

Once articles about the IBF lobbying for a rate cut started appearing in the newspapers it was probably inevitable. To be honest, CiaranT has posted a few times about this in recent weeks so we were well warned.

I wonder how much has flowed into State Savings this year and how much of that flow is a direct result of threads on AAM such as Ciaran's Best Buys and my "State Savings looking good" thread :p

One other thing to say is that the new rates are still fairly good and just because the 17th cert issue lasted 5 years doesn't mean that the 18th will last that long. There could be another cut. In 1998, there was only 6 months between savings cert issues.
 
Thanks The Ghoul. You have given your fair share of good State Savings tips here too.

Hopefully a few people spotted and benefited from the early warning signs here. The deposit rates are unfortunately on a significant downward curve at the moment. If you think it will continue on this curve, and I certainly do, then the only strategy is to lock into term deposit rates that may not have a long shelf life. Again, I would guess that the PTSB 3.06% 1 year term deposit rate wont last for too long.

The Ghoul said:
One other thing to say is that the new rates are still fairly good and just because the 17th cert issue lasted 5 years doesn't mean that the 18th will last that long. There could be another cut. In 1998, there was only 6 months between savings cert issues.
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Interesting. I would be very surprised if the NTMA alter rates again in the near future.
 
The threads helped me big time make a decision and I went in big on budget day on 3 yr and 5.5 yr products. I was a long time deciding as I was and still do worry abourt lending to a bankrupt. But sure I went with it in the end.

when will we know for absolute certainty if PRSI will or will not apply to these products.

Thanks
 
I would imagine that the products that are DIRT free would stand a better chance of having no PRSI but this is just a wild guess. It's incredible that state savings launch new issue's of products -some very long term 10 years and you have to try to decide will you put money in on factors unknown, which in the 4 and 10 year bond you get hit by DIRT and maybe soon you will get hit with PRSI.
 
If you file a tax return, do you have to even mention DIRT-free income from state savings? I know there is an entry on the Form 11 for "deposit interest on which DIRT has not been paid" but not sure if you are supposed to mention allegedly tax-free state savings here. If not, I don't see how they would levy the PRSI, but perhaps you do have to mention it ... does anyone know?
 
Somewhat off topic comment, I've just noticed the following text in the new Solidarity bond brochure.

Holdings in Series 1 of the National Solidarity Bond do not
count towards the limits in this 2nd Issue.
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Does this also apply to the savings certs and bonds?

I never considered this - I thought that the State Savings limits were per product, not per product issue.
 
I have a Brochure for Savings Certs 17th Issue and Savings Bonds 12th Issue that contains the following.

Individuals are subject to a maximum €120,000 ....

"Except when the holder subsequently purchases or seeks to purchase further Savings Bonds, the following shall not be taken into account for the purpose of these maximum holdings:
- Inherited Savings Bonds
- Savings Bonds Purchased by reinvesting the proceeds, or part of the proceeds, of maturing Savings Bonds, Savings Certificates, or Instalment Savings"

The same applies to Saving Certificates.

As far as I can remember similar wording appears in the letter you receive when savings are maturing.
 
Basically on the 4 and 10 year bond if you put €250,000 in each one i.e. €500,000 you can do another €500,000 in the 2nd issue. The 3rd issue if we ever have one is years away i would suspect.
 
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