AIB's Special Term Accounts

Westie123

Frequent Poster
Messages
183
Hello,
I am thinking of putting some money into a AIB 3 yr special term account
http://www.aib.ie/servlet/ContentServer?pagename=ROIPersonalPortal/AIBContent_C/pp_service&c=AIBContent_C&cid=1136826272405&channel=P003
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.
 

oldtimer

Frequent Poster
Messages
849
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.
 

aidan119

Frequent Poster
Messages
99
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 Can be withdrawn by closing the account but then you must pay the dirt and there also is a penalty fee by the bank if there is a cost to them with interest rate differentials.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.
 

Sunny

Frequent Poster
Messages
3,932
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
 

CCOVICH

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Messages
8,831
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).
 

aidan119

Frequent Poster
Messages
99
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.
 

Westie123

Frequent Poster
Messages
183
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).
 

Westie123

Frequent Poster
Messages
183
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?
 

aidan119

Frequent Poster
Messages
99
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)
 

Westie123

Frequent Poster
Messages
183
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...........
 

Darando

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Messages
154
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.
 

cork

Frequent Poster
Messages
307
Credit Unions don't seem to be offering those accounts with the dirt exemption either.

Think I'll go with rabo.
 

oldtimer

Frequent Poster
Messages
849
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.
 

~michelle~

Registered User
Messages
10
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
 

aidan119

Frequent Poster
Messages
99
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.
 

Brendan Burgess

Founder
Messages
40,565
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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