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| A savings account where the interest rate you receive is fixed for a set period of time. With a fixed rate savings account you will not lose out if interest rates fall during the fixed rate period as you will still be fixed on the higher rate. Conversely, you will not benefit if interest rates rise during the fixed rate period. There will generally be restrictions regarding any withdrawals from your account during the fixed rate period. |
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| A savings account where the interest rate you receive is free to increase or decrease. This movement in the interest rate generally happens whenever the European Central Bank (ECB) increases or decreases their interest rates. Unlike Fixed Rate Savings Accounts there are generally no restrictions regarding any withdrawals from your account meaning that you can withdraw funds at any time without penalty. |
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| A notice savings account is a variable rate savings account where you must give the bank 'notice' of your intent to withdraw, usually between 1 week and 3 months depending on the product (e.g. with a 30 day notice account if you request a withdrawal of funds from your account today you will receive these funds in 30 days time). In return for not having immediate access to your funds, this type of account will pay a higher rate of interest than a variable rate savings account which does not require a notice period. |
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| A demand savings account is a variable rate savings account where you can withdraw funds on 'demand' (i.e. once you request a withdrawal you are given your funds immediately) and without penalty. |
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| There are many different types of savings accounts available in the Irish market. Some can be opened with as little as €1 whereas some require a larger opening balance. Some accounts require you to save a regular amount each month and some will accept lump sums. Whatever your requirements, FinanceOne will find the savings account that is right for you. |
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| Depending on the type of savings account you choose, there may be restrictions as to when and how often you can access your funds. Generally, the more restrictions there are on an account in this regard the higher the interest rate offered. FinanceOne can assist you in finding the savings account that suits your needs. |
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| A deposit account is an account where you invest a fixed sum of money for a fixed amount of time. A savings account is an account where you accumulate your funds by lodging funds into it each week / month etc subject to the terms and conditions of the particular product. |
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| Different savings accounts will offer different interest rates based on a number of factors including: minimum balances required, how easy it is to access your funds, whether the interest rate is fixed or variable etc. As a general rule of thumb, the more restrictions there are on a savings account, the higher the interest rate will be. FinanceOne can help you to make sense of the ‘small print’ |
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| All interest earned on deposit accounts is subject to Deposit Interest Retention Tax (DIRT). This tax is 25% (effective from 8th April 2009) of interest earned and will be deducted by the bank at source. As such, the interest you will receive will be net of this tax. For example, if you earn gross interest of €100 the bank will deduct DIRT of €25 and pay you €75. The bank will then pay this tax to the revenue. |
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| APR stands for Annualised Percentage Rate and is the rate applicable on your deposit account net of any charges and taxes applied by the financial institution. |
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| Banks have different appetites for savings account funds at different times. Depending on how a bank funds its day to day operations it will either look to attract savings accounts at a point in time, and hence pay a higher interest rate, or, at times, a bank may be indifferent to savings accounts funds and so pay a lower interest rate. |
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When calculating the amount of interest that you will earn on your savings it is important to know whether the interest is being calculated on the basis of a 360 day year or a 365 day year. The 360 and 365 day years are known as 'day count conventions' and they determine how interest accrues over time for a number of investments. Many different day count conventions have been developed in the financial markets to suit various accounting needs and often differ between countries (e.g. when calculating the interest on a GBP account in the UK we assume that there are 365 days in the year and when calculating the interest on a US Dollar account in the USA we assume that there are 360 days in the year).
Prior to the introduction of the Euro, old Irish pound savings accounts calculated the interest due based on a 365 day year. Take the following example of an amount of £100,000 at 5% interest for 90 days. Interest would be calculated as follows
£100,000 x 5% = £5,000 per annum
£5,000 / 365 = £13.70 per day
£13.70 x 90 = £1,233.00 gross interest for 90 days
When the Euro was introduced it was decided that all interest calculations for the Euro would be based on a 360 day year. Taking the above example again, interest would work out as follows
€100,000 x 5% = €5,000 per annum
€5,000 / 360 = €13.89 per day
€13.70 x 90 = €1,250.00 gross interest for 90 days
However, many savings accounts in the Irish market still have interest calculated based on a 365 day year and the interest rate is adjusted accordingly.
Contact Finance One and we will find out how your interest will be calculated |
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| Unlike a fixed term deposit account, where FinanceOne can seek to tailor an account to your needs, Savings accounts are generally a 'one size fits all' proposition. However, given the many different types of savings accounts available in the Irish market, FinanceOne can assist you in finding a savings account that suits you |
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| Everything can be negotiated. If you cannot find an account to suit your needs we are more than willing to meet with you to discuss your particular requirements |
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| Most banks are rated by Independent ratings agencies such as Moody's and Standard & Poor's. These agencies minutely examine financial institutions and give each a rating which reflects each institutions ability to meet it's financial commitments (which includes repaying your deposit) The higher the rating the more secure the financial institution. |
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Financial institutions covered by Irish Government guarantee scheme:
AIB: Deposits are 100 per cent covered by Irish Government scheme
Anglo Irish Bank: Deposits are 100 per cent covered by the scheme
Bank of Ireland: Deposits are 100 per cent covered by the scheme
EBS Building Society: Deposits are 100 per cent covered by the scheme
Irish Life & Permanent: Deposits are 100 per cent covered by the scheme
Irish Nationwide: Deposits are 100 per cent covered by the scheme
Post Bank: Deposits are 100 per cent covered by the scheme
Other Irish deposit-takers:
Post Office: Irish Government guarantees all deposits
Credit Unions: Deposits up to maximum of €100,000 covered by Irish Deposit Protection Scheme
Foreign-owned institutions covered by Irish Deposit Protection Scheme :
ACC Bank Deposits up to maximum of €100,000 covered by Irish Deposit Protection Scheme
Halifax / Bank of Scotland (Ireland): Deposits up to maximum of €100,000 covered by Irish Deposit Protection Scheme
National Irish Bank: Danish scheme covers up to DKK300,000 (approx €40,000). Irish Deposit Protection Scheme covers the balance up to a maximum of €100,000. In addition, National Irish Bank (a subsidiary of Dankse Bank) deposit customers are now 100 per cent covered by the Danish Government Guarantee Scheme until September 30th, 2010.
Ulster Bank/First Active: Deposits up to maximum of €100,000 covered by Irish Deposit Protection Scheme
KBC Bank: Deposits up to a maximum of €100,000 covered by Irish Deposit Protection Scheme
Pfizer Int’l Bank: Deposits up to a maximum of €100,000 covered by Irish Deposit Protection Scheme
Banks covered by schemes in other countries:
Investec Bank (UK): 100 per cent of the first £50,000 per person is covered by the UK Financial Services Compensation Scheme
Leeds Building Society: 100 per cent of the first £50,000 per person is covered by the UK Financial Services Compensation Scheme
Northern Rock: All deposits held with Northern Rock are guaranteed by the Bank of England and HM Treasury regardless of amount
RaboDirect: 100 per cent of the first €100,000 per person is covered by Dutch Deposit Guarantee Scheme.
An alternative way to gauge the risk of your bank is to look at the credit default swap market. Credit Default Swap (CDS) spreads measure the premium to the risk-free interest rate that a bank can expect to pay in the market for 5-year loans. The higher the CDS for any given bank, the riskier the market thinks that particular bank’s debt is. |
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| Money laundering is the process by which criminals try to disguise the proceeds of illegal activities. For example, criminals might try and save funds in a savings account as one of a number of steps to try and hide illicit funds. As a consequence, all deposit taking institutions are obliged to establish the identity of new clients. This is done by taking copies of the depositors passport or drivers licence and a copy of a recent utility bill in the depositors name. |
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