# Big Drops in BOI Deposit Rates - from 22/2/2019



## 1dave123 (14 Feb 2019)

https://personalbanking.bankofireland.com/save-and-invest/savings/press-notices/


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## dub_nerd (14 Feb 2019)

Their website is inconsistent -- still showing 0.15% AER for 365 31-day notice account, even though it says from 23-02-2019:

https://personalbanking.bankofirela...65-12-month-fixed-term-deposit-account/rates/


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## Lightning (14 Feb 2019)

Yet more deposit rate drops 

I would guess that the BoI term deposit rates might drop too on 22 February 2019.


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## Lightning (22 Feb 2019)

Term deposit rates have dropped today.


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## dub_nerd (22 Feb 2019)

Wow, yeah, bad news for me. 0.1% for a 12-month deposit and 0.05% for 31-day notice. Their rates have gone from derisory to completely pointless. Makes you wonder if we might yet see negative retail rates.


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## RedOnion (22 Feb 2019)

dub_nerd said:


> Makes you wonder if we might yet see negative retail rates.


The only thing preventing it (across Europe), is system limitations in a lot of banks. Those pesky mainframes that don't understand a minus sign...


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## demoivre (22 Feb 2019)

In real terms most of those rates are negative.


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## Lightning (22 Feb 2019)

dub_nerd said:


> Wow, yeah, bad news for me. 0.1% for a 12-month deposit and 0.05% for 31-day notice. Their rates have gone from derisory to completely pointless. Makes you wonder if we might yet see negative retail rates.



There has been only a tiny handful of European banks who have applied negative retail deposit rates. No Irish bank has gone there but BoI amended the T&C's of their instant access deposit account, a few years ago, to allow BoI charge negative rates in the future if they wished. 

Negative rates are common with large corporate deposits.


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## inflation (27 Feb 2019)

RedOnion said:


> The only thing preventing it (across Europe), is system limitations in a lot of banks. Those pesky mainframes that don't understand a minus sign...



And the fact that there'd be bank runs immediately by retail customers


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## jpd (27 Feb 2019)

inflation said:


> And the fact that there'd be bank runs immediately by retail customers



as they ran to the bank across the road?
as they ran to the credit unions, who immediately deposit it back in the bank across the road?
as they rushed to buy a bigger mattress?


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## inflation (27 Feb 2019)

jpd said:


> as they ran to the bank across the road?
> as they ran to the credit unions, who immediately deposit it back in the bank across the road?
> as they rushed to buy a bigger mattress?



Very hard to understand what you are asking as its phrased oddly but I guess the answer you are looking for is as soon as there was negative interest rates I'd withdraw every penny and put it in a different asset class. I'm sure lots of others would do similar.


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## jpd (27 Feb 2019)

Sorry, I was trying to make a point that people who keep a large sum of money in the bank are hardly likely to run out and buy shares in BP or whatever - the money in the bank is "safe"  money and unlikely to be risked on risky assets - interest rates have been low for years now, so surely if it was to be moved, it would already have been moved.

In fact, asset prices of other classes are already high compared to long-term averages so future returns are more likely to be smaller in the future than they were in the past 20 years.


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## dub_nerd (27 Feb 2019)

inflation said:


> And the fact that there'd be bank runs immediately by retail customers





inflation said:


> ... as soon as there was negative interest rates I'd withdraw every penny and put it in a different asset class. I'm sure lots of others would do similar.



Different strokes for different folks I guess, but I don't agree with your logic at all. The difference between +0.1% and -0.1% is equivalent to four quid a week on a hundred grand. I don't see why the change of sign is important. Since the global financial crisis my number one priority has been capital protection. If Rabo had stayed I'd happily have taken a few tenths of a percent less from them than from any Irish bank, even if the rate was negative. Whereas I'm quite unhappy with the risk of money in an Irish bank, even if rates were a few tenths higher. But I'm stuck with no choice.

The lower rates have become, the less I have been inclined to move money into risk assets. I appreciate that's what everyone else has been doing -- all the more reason not to follow the herd, as it means those other asset classes are almost certainly overvalued. Instead, I've taken money I can afford to lose and put it all in high risk investments. If it pays off, well and good, I will get a level of return commensurate with the risk. If it doesn't, I'm not in trouble. What I won't do is put lots of money in assets that everyone else considers low to medium risk as I don't think the actual level of risk justifies it. That's just my opinion of course, but when you look at things like market reactions to ending of QE you realise that the whole thing has been completely pathological for years.


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## EmmDee (4 Mar 2019)

inflation said:


> ...as soon as there was negative interest rates I'd withdraw every penny and put it in a different asset class. I'm sure lots of others would do similar.



That's the point of negative rates - on a macro scale


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## inflation (6 Mar 2019)

EmmDee said:


> That's the point of negative rates - on a macro scale



Was the point not to encourage lending/borrowing and thus business investment and expansion along with encouraging consumer spending and the unwanted effect was asset bubbles. Or maybe the desired effect all along was asset inflation......................................


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## NiallSparky (6 Mar 2019)

inflation said:


> Was the point not to encourage lending/borrowing and thus business investment and expansion along with encouraging consumer spending and the unwanted effect was asset bubbles. Or maybe the desired effect all along was asset inflation......................................



Moving money away from savings, and towards other assets such as bonds and equities, provides cheaper sources of finance to businesses that they can use to invest.


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## inflation (6 Mar 2019)

NiallSparky said:


> Moving money away from savings, and towards other assets such as bonds and equities, provides cheaper sources of finance to businesses that they can use to invest.



Is that not what I just said?


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## dub_nerd (6 Mar 2019)

It's two sides of the same coin. Cheap money encourages both investment and misallocation of resources.


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## Philip S (8 Mar 2019)

I will never understand bank interest rates in places. 
If someone is trying to save for mortgage the interest is low to start with but drops after 15K. Sure very few houses can be got with a deposit of less then 15k as a first timers buyer and id say none if a second time buyer. 

So one one hand they are looking for people to buy but not willing to encourage them to save the money.


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## NoRegretsCoyote (8 Mar 2019)

Remember DIRT still eats up nearly half the interest on these microscopic rates!

At the moment I have a lot of savings in a current account. The opportunity cost is very small compared to the benefit of having funds to hand if needed for an emergency.


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