# AIB's Special Term Accounts



## Westie123 (2 May 2007)

Hello,
 I am thinking of putting some money into a AIB 3 yr special term account
[broken link removed]
and was wondering if there is any other equivalent product which offers a better return? Because the first €480 is Dirt free you can put up to just over €11,000 into the account with no dirt being deducted. The current interest rate is 4.35% which is variable. I asked in my branch about possible future changes in the rate and was told that the assumption was that it would match any increase in the ECB rate. However that is written in the terms and conditions.

I would be interested in other peoples opinions on this offer from AIB.

Thanks.


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## oldtimer (2 May 2007)

I considered this but its no great deal. Remember your money is locked in for the 3 years. Rabo 5% on 10k and money available on demand sounded better to me.


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## aidan119 (3 May 2007)

I looked into this in some detail and spoke to the bank.

Its not actually locked in. Can be withdrawn by closing the account but then you must pay the dirt and there also is a penalty fee by the bank if there is a cost to them with interest rate differentials. The formula for this is in the terms and conditions. 

I think it is worth a serious look especially if they will increase the rate when ECB rates rise.


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## Sunny (3 May 2007)

If they know your money is tied in for three years, they are less likely to match any future rate rises because they know you can't move the money. I wouldn't listen to what the branch staff said. Unless it states that it tracks the ECB rate, I would be suspicious


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## CCOVICH (3 May 2007)

Even if you can withdraw the money, I would have thought that the rates offered by Rabo will beat what AIB are offering (as far as €10k anyway).


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## aidan119 (3 May 2007)

Sunny said:


> If they know your money is tied in for three years, they are less likely to match any future rate rises because they know you can't move the money. I wouldn't listen to what the branch staff said. Unless it states that it tracks the ECB rate, I would be suspicious


 


The Revenue rules for STA state that the interest rate cannot be guaranteed for more than one year. So they can't make a definitive statement on rates tracking ECB.
I had this out with AIB and they say they do intend to track ECB because they know if they don't that people can close the accounts.

But, only word of mouth as they say.


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## Westie123 (3 May 2007)

Hi,

I just noticed a typo in my original post! The last line of the first paragraph should have read "However that is *not *written in the terms and conditions"

For the 3 yr AIB offer, the first €480 interest pa is Dirt free, meaning that at the moment your money will effectivly earn 4.35% net on amounts up to approx €11,000, whereas the Rabo rate is 5% gross (4% net).


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## Westie123 (3 May 2007)

Just something I noticed on the Rabo site when I was checking the rates. On amounts up to €10000 they give 5% in an account where you can withdraw money on demand but if you take a 3yr term account where your money is locked in you get 4.24%. Why would anyone go for the 3 yr account?


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## aidan119 (3 May 2007)

Note that Rabo is only 5% up to Dec 2007, then falls to ECB rate ( currently 3.75% but possibly rising to 4% in June)


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## Westie123 (3 May 2007)

Thanks Aidan119, I missed the Rabo rate falling in Jan 08. It looks like the interest rate on a good number of these saving products will fall to the ECB rate in 2008. For example the AIB regular saver rate will go from 7.1% to the ECB rate in 2008 . We may not have as much choice  between products in the New year as we do now...........


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## Darando (3 May 2007)

Westie123 said:


> For example the AIB regular saver rate will go from 7.1% to the ECB rate in 2008 . We may not have as much choice between products in the New year as we do now...........


 
I can see there be a few "new" savings schemes in 2008, whether that is AIB or other banks. Seems to be a good bit of competetion out there for regular/savings accounts now, so someone will have a rate higher than ECB in 2008. cant see all the banks having the same rate i.e ECB rate in 2008 - so transfer to new accounts I reckon when it happens.


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## cork (4 May 2007)

Credit Unions don't seem to be offering those accounts with the dirt exemption either.

Think I'll go with rabo.


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## oldtimer (4 May 2007)

Are you sure? My credit union has it on offer. In fact its the only incentive the credit union offers to SSIA holders. Very disappointing Credit Union offered no regular saver or attractive product. Not interested in taking in money.


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## ~michelle~ (4 May 2007)

The special term accounts were initially set up due to credit union lobbying, and other financial institutions took them on but the are more popular amongst credit unions.  

It depends on the credit union, most credit unions offer them, as they are a good way of gaining tax free dividend when the clients shares are already tied in as collateral on a loan.  However, as they are share accounts dividend is paid at the end of the year depending on the surplus / profits made by the credit union


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## aidan119 (4 May 2007)

AIB are offering 4.5% for 3 mths after SSIA maturity. Instead of going into the STA now I intend to wait for the 3 mths and stay on this rate. That should carry us through until the next expected ECB rate increase in June.

If AIB then don't increase the STA rate by the increase in ECB rate, it shows that the 4.35% variable rate is not to be trusted for the period of the fixed term. If they do increase it, I think its a reasonable place to put your money for 3 yrs.


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## Brendan Burgess (13 May 2008)

Is AIB the only bank to offer Special Term Accounts? 

What are the Revenue's conditions attaching to such accounts? 

Brendan


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## ClubMan (13 May 2008)

_BoI _and the _CUs _also offer them. Maybe more institutions too.  point to relevant info including the rules governing the tax treatment of such accounts.


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