Retain Minimum Current Account Balance or Put in Savings Account?

[heisenberg]

I am just wondering what is the wisest decision here. At the moment I am with AIB. As you know, they charge quarterly fees and transaction fees if you do not maintain a minimum balance of €2500. At the moment I do not keep this balance so I am being charged €10-€15 each quarter.

I have been debating wheter I should retain a balance to avoid these fees. I am putting money away each month into a regular saver account, but thought it might be wiser to transfer some of these funds to my current account.

I think the amount of interest I am earning in my savings account is smaller than my expected quarterly fees, so theoretically I should be saving more money by keeping a balance in my current account.

Is there any reason not to do this? Are there any downsides to keeping a current account balance of €2500 over having €2500 in a seperate savings account?

Thanks.

 

[MysticX]

Consider what interest you would get in the savings account you would park the €2500 into.

E.g. 2.5% AER gross would be €62.5 gross or ~ €41.9 after DIRT (assuming interest is paid within 1 Year with DIRT @ 33%, isn't DIRT @ 36% for longer interest pay outs?).

With regular saving accounts you have to factor in that you won't earn interest for the entire year on the whole capital as you're only building it up as the year progresses...e.g. your monthly top up in May will only give you interest for that particular portion of your savings for 8 months (May - Dec) by end of 2013.

So yes it comes down to whether you'll get more leaving it on deposit rather than paying the fees each year (assuming you're not willing to move current accounts).

Also consider that you'll be paying PRSI as well as DIRT on any interest by 2014 (I think that's the date that comes into play).

Note as well that the ECB rate dropped recently to .5% so interest rates for savings will likely drop pretty soon. In the longer term as well I can easily see the ECB rate dropping to .25% eventually as the EU tries to pull itself out of its economic doldrums. So you may want to go fixed term if you're going down the interest route though unless its an account that pays interest upfront you you'll probably be hit by the additional PRSI tax (assuming you lock in for a year).

AIB isn't the best for deposit savings so you'll probably be looking externally for the best deposit rates (ref AAM best buys for savings http://www.askaboutmoney.com/showthread.php?t=90481).

 

[theresa1]

Move your current account to PTSB or even EBS and check out state savings.

 

[murphaph]

Indeed, why stick with AIB in the first place?

 

[Lightning]

Exactly, the best solution is to switch to PTSB.

 

[heisenberg]

Indeed, why stick with AIB in the first place?

Well if I changed banks I would also have to change my bills, money transfers and my wages as well. It would be a big headache.

In addition I found AIB's online banking to be very convenient, with my current account, deposit account, loan and regular savings account all easily accessed and very simple to transfer money between accounts.

I guess I'm paying for convenience.

 

[murphaph]

Well if I changed banks I would also have to change my bills, money transfers and my wages as well. It would be a big headache.

In addition I found AIB's online banking to be very convenient, with my current account, deposit account, loan and regular savings account all easily accessed and very simple to transfer money between accounts.

I guess I'm paying for convenience.

I'd say you are paying a pretty penny for it. You can retain the AIB internet banking without the AIB current account. I retained it for my AIB credit card when I closed all my AIB current accounts. You have fairly good online services with PTSB AFAIK. You could also move your savings accounts...AIB don't have anywhere near the best rates.

As for bills and wages...well, it's really not a problem. Banks like AIB thrive on the inertia of some customers. Don't let yourself be ripped off by them.

 

[TRS30]

Well if I changed banks I would also have to change my bills, money transfers and my wages as well. It would be a big headache.

In addition I found AIB's online banking to be very convenient, with my current account, deposit account, loan and regular savings account all easily accessed and very simple to transfer money between accounts.

I guess I'm paying for convenience.

I recently switched from BOI to PTSB. Wasn't really a headache at all, PTSB have a switching section which look after all the tranfer of DDs and SOs. There online banking is just as good and its easy to switch money between the BOI CC and accounts I kept and my new PTSB account. They also have a very competitive on demand access account that you can set up yourself online.