AIB has become the latest bank to announce a series of interest rate increases for savers on the back of increasing pressure to pass on some of the recent European Central Bank (ECB) rate hikes to those depositing cash.
The increases will apply across AIB and its EBS unit’s deposit products, benefiting both personal and business customers.
The rate announcement offers improved returns for savers, with an increased rate of 3 per cent on the AIB online saver account.
AIB’s online saver account offers a 3 per cent return on sums from €10 to €1,000 per month for 12 months. Customers can open a maximum of four accounts for different savings needs, allowing them to earn a rate of 3 per cent on amounts up to €48,000 a year.
However, the increase comes with caveats, as a rate of 0.25 per cent applies after the monthly threshold of up to €1,000 is reached on each account.
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AIB is also increasing all its fixed-term deposit rates for personal and business customers with its two-year term deposit account rising to 3 per cent.
Its one-year term deposit account will increase to 2.5 per cent with a 1.5 per cent rate available on its six-month term deposit account.
In addition, the AIB junior and student saver rates and the EBS family savings rate are increasing to 3 per cent, and the EBS children and teens savings rates are increasing to 2.5 per cent.
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The AIB online notice seven deposit account is increasing to 0.75 per cent, with the AIB demand deposit account and EBS instant access account rates increasing to 0.25 per cent.
AIB’s fixed rate changes will be available from September 12th, with all other rate changes available from September 19th.
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AIB head of products Elaine Downey said the bank was “pleased to announce” the rate increases.
The bank follows Permanent TSB (PTSB) which moved to increase various deposit rates earlier this week, with its three-year fixed-term account increasing by one percentage point to an annual rate of 3 per cent.
Bank of Ireland was the first of the banks to raise deposit rates earlier this week. The highest rate on offer there will also be 3 per cent – for customers with regular savings accounts where money is lodged on a monthly basis.
The European Central Bank has increased the deposit facility rate paid to banks on surplus deposits lodged with the Central Bank from minus 0.5 to 3.75 per cent since July of last year.
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Minister for Finance Michael McGrath said last week he expected to see rate rises for depositors in the next few weeks, while the Oireachtas finance committee is preparing to grill the banks next month over their interest rate policies.
Irish banks have lagged many European peers in raising mortgage rates since the ECB started hiking rates last summer, as they are more reliant on cheap household deposits to fund loans.
Almost 95 per cent of Irish household deposits are sitting in on-demand accounts, which are earning little or nothing by way of interest.
