AER on Lump Sum vs Regular Savings

Might be the wrong place for this but looking around at the best buys on AAM and one query came to mind..

How come AERs on Lump Sums are generally lower than that on Regular Savings? I would have though that interest rate payable would be similar on both - I'm sure I'm missing something quite obvious here but can't think why this is....

Why do you think that?

Regular savers are probably loss leader products. And remember that a 12 monthly payments of €1K into a regular saver account offering 8% does not equate to €12K @ 8%. In fact the return after a year of saving is more like €513 gross. See here.

ClubMan,

Thanks for that. Was just looking at some of the regular accounts but I think the higher rates are for Term accounts so as you say, I assume these are loss leaders in the hope that clients will continue saving with the same institution (at a lower rate)...

It has already happened that some regular saver accounts originally offering 7%+ have dropped the rates significantly. Avail of the 7%+ regular saver rates while they are going but keep an eye on developments and move elsewhere if/when necessary.

Not only do the high rates only apply only to regular savings but the small print generally gives a reversion date within a year or two to say ecb rates. The reason is they get you to set up a plan, you are delighted with the rate but before any significant principal builds up the rate plummets and most people dont know or maybe dont care enough. In any case even if you then closed the account and moved the principal the rates would still be poor as it is now a lump sum.