# Is the KBC 3% account worth the fees?



## Lightning (5 Sep 2013)

KBC have launched a 3% 1 year 3 months term deposit product. A great market leading rate. 

The catch is you are obliged to open a current account to avail of this product. The current account will incur fees even if not used. 

But is it worth it financially to incur the fees to get a greater net return? 

*5,000 EUR deposit:*

Option 1: Permanent TSB @ 2.50% Fixed. 
Return:
5,000 *(0.025*(15/12)*(1-(0.33+0.04))) = 98.44 EUR. 

Option 2: KBC @ 3.00% Fixed. 
Return:
(5,000 *(0.03*(15/12)*(1-(0.33+0.04))))-(6*5)-(5*2) = 78.12 EUR. 

Hence, for a circa. 5k-10k deposit, KBC is not worth the fees. 

*30,000 EUR deposit:*

Option 1: Permanent TSB @ 2.50% Fixed. 
Return:
30,000 *(0.025*(15/12)*(1-(0.33+0.04))) = 590.63 EUR. 

Option 2: KBC @ 3.00% Fixed. 
Return:
(30,000 *(0.03*(15/12)*(1-(0.33+0.04))))-(6*5)-(5*2) = 668.75 EUR. 

Hence, for a medium sized deposit, circa 30k, you should get a better return with KBC but you run the risk that KBC will hike fees further. 

*Very large deposit:*

For a very large deposit, and KBC accept up to 1,500,000 EUR, you should get a much better return with KBC than PTSB even if KBC have moderate fee hikes.

*Assumptions / notes:*
The above assumes one does not make use of the KBC debit card at all which may incur further KBC fees depending on your current account balance. i.e. you continue to use your existing card. 
The above assumes KBC do not raise their fees during the term.
PTSB pay 2.5% on a slightly longer term than KBC. 1 year 3 months has been used for simplicity. 
0.33 = DIRT rate.
0.04 = Normal PRSI rate, PRSI applies from 1 January 2014. 
6 = KBC quarterly maintenance fees. 
5 = Government ATM card levy.


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## DMcL1971 (5 Sep 2013)

I agree with you on this Ciaran. When I first heard that KBC would be charging 6 Euro per quarter I decided I wasn't changing over. But after seeing the 3% rate on the 15 Month account I was tempted. 

However, after doing some mathematics last night I realised that it wasn't worthwhile for me. By my calculations and yours, you would be better of with PTSB at 2.5% for any amount under 10K. Once you go over that it may be worth considering.


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## Lightning (6 Sep 2013)

Glad you came to the same mathematical conclusion. 

Obviously if one is switching current account, you need to also consider the opportunity cost of having to maintain 2,000+ EUR in your current account each and every day to avoid ATM fees. This does not need to be considered, as per the above, if you are keeping your existing current account.


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