In managing our money, it is important to consider all options for your savings.
While we often stick to banks in our own country, there are opportunities to earn more interest on our money by looking at foreign banks. This blog will show you how to explore international banking, find better savings rates, and make the most of your money.
Understanding Different Savings Rates:
Just like prices for things like coffee can vary between countries, so can the best savings rates for your money. For example, saving money in Portugal, Italy, or Sweden might earn you more than saving in Ireland. As a smaller market with less banks, Ireland doesn’t have to be as competitive.
Using Online Platforms for Better Rates:
For Example Raisin Bank is a German cloud bank that provides banking as a service to fintech companies. It offers savings rates to individuals across variety of Banks across Europe under a variety of variable and fixed term accounts. It makes it easier to compare rates and move your money to international accounts. European banks can provide services here in Ireland, and if Irish households want to avail of those services and put their deposits in these foreign banks, that’s the way the single market functions. Trade Republic, another Berlin-based digital investment platform, provides instant access to your money and as of February 2024, provides a gross interest rate of 4% available for Irish Savers up to €50,000 under the EU Government Guarantee Scheme so check these out to get the best savings rates for your money.
Seeing the Benefits:
Let’s say you have €30,000 saved up for a house deposit. If you keep it in a typical Irish bank account, you will earn very little interest each year. But if you explore options abroad, you could earn a lot more, especially with Trade Republic (4%) or Raisin (3.65%) offering higher rates. The best available rates from retail banks in Ireland are currently around 2% for lump sums and 3% for online monthly savings and are only for a year with AIB and Bank of Ireland being the best of them. All are subject to Dirt tax at 33%.
Dealing with Taxes:
When you earn interest from savings accounts in other countries, you might have to pay tax on it. It’s important to understand these rules and make sure you follow them. Whilst Raisin.ie and Trade Republic are subject to DIRT Tax, currently 33% on the interest, some institutions may be liable for Exit Tax @41%.
Best Savings Options for Irish Savers:
By looking beyond your local bank, you can take control of your savings and potentially earn more and get the best savings rates for your money. Irish banks might not always offer the best rates, so it’s worth considering other options. If the Irish banks continue to keep almost all the interest they are getting on Irish saver’s money to themselves then the answer is clear. Irish savers need to switch to better rates elsewhere.
It is always recommended to get impartial advice from a qualified financial advisor to help you understand the best options on where to save your money to achieve your financial goals. For more information on where to save your money, watch this short video https://youtu.be/PLsLDvLa7TY and contact us here