Rabodirect and KBC Bank to cut deposit rates further

Irish savers will see their already meagre returns slashed further when banks such as KBC and Rabodirect cut their deposit rates at the end of this month.

KBC Bank, which had been offering a market beating rate of 1.05 per cent on up to €100,000 on its smart move online demand account, is to cut the rate down to 0.7 per cent from May 27th. The bank will also knock 50 percentage points off its regular saver account, with the return on offer falling to 1.5 per cent from 2 per cent previously. The bank’s demand deposit account will offer just 0.15 per cent , down from 0.3 per cent, and its smart access demand account will fall from 0.85 per cent to 0.7 per cent.

The move means that a saver with €100,000 in a KBC smart move account will see their annual return drop from about €1,050 to about €702.25. Once Dirt is deducted at a rate of 41 per cent, the savers return falls to just €414 a year on a substantial deposit of €100,000.

Savings specialist Rabodirect is set to cut deposit rates from May 31st. It will cut the rate of interest it pays on its instant access account from 1 per cent on the first €50,000 to 0.6 per cent. The bank will now pay 0.2 per cent on amounts of between €50,000 and €5 million, down from 0.5 per cent previously, and 0 per cent on amounts above €5 million. Rates will also fall on the bank’s 30 day notice account, down to 0.45 per cent from 0.85 per cent, and from 0.95 per cent to 0.55 per cent on the bank’s 90 day notice account.

The moves mean that Nationwide UK Ireland will now offer the best return on instant access accounts of 0.76 pe cent , or Irish savers can look for better returns via pan-European platforms such as Raisin. com, which offers a return of 1.4 per cent on a one-year deposit.

In line with European interest rate movements, deposit rates in Ireland are trending downwards, but figures from the European Central Bank earlier this month showed that Irish savers are earning the lowest return on their deposits across 18 European countries.

And further rate cuts are likely to be on the way as banks look to make up for rate cuts they have offered mortgage holders.