Savers urged to act as banks set to cut better interest rates soon

It came after Bank of Ireland said it would reduce two of its savings rates and experts warned there would be more cuts to come.

Irish households have almost €160bn resting on deposit, most of which is in accounts that pay little to no interest.

Bank of Ireland cuts savings rates in move expected to be followed by others

The fear now is that there will be a string of rate reductions on the back of four cuts in European Central Bank (ECB) rates last year.

Despite the latest rate reduction, Bank of Ireland is still offering up to 3pc on some of its other savings products. AIB continues to offer up to 3pc on some of its fixed-term savings products.

The Bank of Ireland move comes after the ECB decreased its key rates for the fourth time last month, with a string of reductions expected again this year.

Bank of Ireland is reducing the interest rate on its 12- and 18-month fixed-term deposits by 0.25 percentage points. The changes take effect from tomorrow.

Returns on the Advantage 12-month fixed-term savings account will come down from 2.5pc (annual equivalent rate) to 2.25pc APR.

On the Advantage 18-month fixed rate, the return is coming down from 2.98pc APR to 2.73pc.

Customers who are already in the process of opening a 12- or 18-month term deposit account can still avail of the existing rates if they open their account by today.

The interest rate for the Advantage six-month fixed-term deposit will not change.

Bank of Ireland said there would be no changes to any of its other deposit products, including SuperSaver, Notice or Instant Access Demand.

The Bank of Ireland reductions are likely to be replicated by other deposit takers.

In October, fast-growing fintech Revolut cut its savings rate.

Revolut reduced its instant-access savings rates by up to 0.4 percentage points in a move that is a blow to the three million customers it claims to have here.

Dutch digital bank Bunq announced soon after the Revolut move that it was offering its users a savings rate of 2.46pc, guaranteed for three months.

N26 cut its savings rates by up to 1.1 percentage points in August.

Daragh Cassidy, of price-comparison site Bonkers.ie, said the Bank of Ireland move was not surprising.

“It should serve as a wake-up call to Irish savers to do something with their money before rates fall further,” Mr Cassidy said.

He said that last year the ECB had cut interest rates four times and it’s likely to cut rates another three or four times this year too.

Mr Cassidy said online banks Revolut and N26 had already lowered their savings rates in response.

“And it was only a matter of time before the main Irish banks did the same,” he said.

He now expected PTSB and AIB to follow suit over the coming weeks.

Bank of Ireland and AIB, he said, were still offering up to 3pc on some of their savings products.

“But I can’t imagine these rates will be around for much longer,” he added.