Financial experts have been scrambling to alert people
Euro money in a stock image(Image: Elizabeth Fernandez/Getty Images)
An urgent alert has been issued to anyone in Ireland with €5,000 resting in their bank account.
Specialists warn a “silent killer” could be quietly eroding people’s savings without them even noticing.
Personal finance expert Dan Malone stated that individuals often go to extreme measures to save a few euro on their weekly shop, but rarely pay the same attention to the “pathetic” interest rates on their bank accounts.
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The founder of honest.ie added: “Our attitude towards where we keep our savings needs to change. We have no problem driving an extra five minutes to shop in a cheaper supermarket to save a few euro, but we are indifferent about whether our savings are in the right account.”
He said that taking just five minutes to compare interest rates could add hundreds or even thousands of euro in interest over the years.
Dan added: “Too many people have cash sitting in accounts that have pathetic interest rates, and inflation will eat away at these savings in the long run.”, reports the Irish Mirror.
“Let’s say that for the next ten years, you leave €5,000 sitting in an Irish account earning zero interest. After ten years, you’ll still see €5,000 in your account after ten years, so it looks like you have the same amount of money.
“But with inflation, your €5,000 might only be able to buy around €4,000 worth of goods in today’s money. So in reality, you’re really losing around €100 per year by keeping your cash in the wrong bank account, but most people don’t realise that because inflation is invisible – it doesn’t show up as a falling bank balance.”
Dan suggested that individuals have two options – they can continue to ignore the issue, or take a few moments to hunt for a better rate.
He added: “Thankfully, gone are the days when we had only a handful of banks to choose from. Now there are dozens of banks available to people, and the best options are currently outside of Ireland. Many EU banks now offer much better rates, and your savings would be just as safe because of EU deposit guarantees.”
Dan has unveiled comparison site honest.ie to assist people in better understanding their saving options and to easily compare different accounts.
He stated: “People are astonished when they compare bank accounts side by side and discover that there are much better options out there for their savings.”
The alert comes as Tanaiste Simon Harris recently conceded that Ireland is “lagging behind other countries when it comes to long term savings”.
Speaking in February, he said there is “approximately €170 billion on deposit in Irish bank accounts”, adding that whilst it demonstrates Irish households are good at saving, “this money is, to be frank, sitting idle”.
He stated: “It generates very little return for the people who are consciously trying to build that bit of security for themselves and their families.”
The Tánaiste revealed he intends to present a framework for an incentivised savings scheme to Government during the first half of this year and plans to prioritise the matter throughout his tenure as Finance Minister.
He explained: “I’m talking about people who are not uber wealthy by any manner or means, but people who are trying to put away a few bob at the end of the week, at the end of the month, either for their own futures to perhaps save for a deposit of a house, perhaps for their children’s futures, perhaps just for a rainy day in terms of their own household economy.
“And at the moment, quite frankly, they’re locked out of any meaningful participation in the investment scenario in Ireland, locked out by complexity, locked out by tax rules, locked out by the amount you’d have to invest to be able to benefit in any sort of meaningful way.”
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