To save or not to save, that is the question. And you’ll get a different answer from baby boomers than from those their junior.

A recent Nationwide UK (Ireland)/ESRI savings index shows a nation divided when it comes to saving. While the cash-strapped under-50s are unhappy with the amount they can put aside, those over 50 are unhappy with their returns.

The index shows that 68 per cent of those under 50 feel they are saving less than they think they should. Those over 50, meanwhile, are peeved by increased taxes on savings, with 62 per cent believing that Government policy discourages the habit.

With pressure on disposable income caused by austerity, and deposit interest retention tax (Dirt) hiked up to 33 per cent in the last budget, the findings are no surprise.

But things might be starting to change. An Irish League of Credit Unions study finds that, for the first time since April 2011, more people are saying they are in a position to save.

Four in 10 of us are now squirrelling away something at the end of the month, the average amount being €170. But whether you’ve got a little or a lot to put aside, where can you get the best return?

For those in the market for a regular savings account, overseas banks doing business in Ireland top the leader board for returns. "Rabo, KBC and Nationwide are the top performers," says Frank Conway, founder of the Irish Financial Review website.

Based on monthly savings of €180 with instant access to your savings, Nationwide UK (Ireland) is offering 4 per cent annual equivalent rate (AER), KBC 3.5 per cent and Rabo 2.25 per cent. All three are variable rates, which means your interest may change from time to time.

Nationwide and KBC require minimum monthly deposits of €100, but there is no monthly minimum at Rabo – handy if an unexpected expense crops up.

While Nationwide offers the best rate, you have to commit to saving for 15 months. Also, the maximum monthly lodgment is capped at €1,000 and, while there are two free on-demand withdrawals in the 12-month period from April to March, third and subsequent withdrawals mean a 30-day interest charge on the amount withdrawn.

But if you’re happy with all of that, based on savings of €180 a month, gross interest earned in one year will be €46.80 at Nationwide and €40.95 at KBC. This is based on interest being calculated monthly. Don’t forget Dirt at 33 per cent will be applied to the interest.

One thing to watch before moving your money into a regular savings account, however, is the avoidance of fees. With some banks requiring balances of between €2,500 and €3,000 per day or per month in your current account, be careful that money moved from a current account to a savings account doesn’t sting. “Otherwise the gains to be made by moving to PTSB or Rabo or KBC could be eaten up on the other side by charges,” says Conway.

Apart from good rates, foreign-owned banks are proving attractive in other ways, according to Conway. “The big issue for most people is security. You’ve got Rabo, which is guaranteed by the Dutch central bank, and KBC, which is Belgian . . . By the time people pay Dirt, a third of the interest they have earned is gone, but they want that money to be there, they want it protected.”

Nationwide UK (Ireland) comes under the UK’s deposit protection scheme.

But if you've got less to save, such as €60 a month, should you even bother? Permanent TSB's Online Regular Saver Account will give you 3 per cent AER (variable), AIB's Online Saver Account 2.95 per cent and Ulster Bank's Special Interest Deposit Account will get you 2.5 per cent. While there is no minimum monthly deposit at PTSB, AIB requires a minimum deposit of €10, Ulster Bank just €1.

Apart from the personal satisfaction of saving €720 in a year, do it with PTSB and you’ll earn €11.70 in interest, while AIB will give you €11.51 and Ulster Bank €9.75.

“But when you kick in Dirt tax on the back of that at 33 per cent, you’re not left with a lot,” says Conway of the gains to be made from banks in this category.

Still, it’s better than nothing.

Lump sums
If you're lucky enough to have a lump-sum deposit knocking around, where's the best place to watch it grow? Whether it's stuffed in your mattress or languishing in a low-interest account, without doubt it's worth moving.

Move €50,000 to KBC’s Smart Access Demand Account and you’ll get €1,300 in interest on its 2.6 per cent rate. A PTSB Online Instant Access Account will give you €1,250 in interest with its 2.5 per cent rate – enough for a nice holiday. Both accounts give you instant access to your money. The maximum lodgment at KBC is €100,000, while there is no maximum at PTSB.

"We've seen quite a few instances recently of people putting their property deposit in our Smart Access Demand Account," says KBC head of retail products Eddie Dillon. "They might need their money at a moment's notice and with this account they can still be earning a nice, attractive interest rate."

The rate, however, is on notice to reduce to 2.3 per cent on August 6th.

Tax on savings
With one-third of all the gains you make on your savings being taken by the Revenue Commissioners, is there any way to beat the system?

One way is to opt for tax-free savings with State Savings products. State Savings is the brand name used by the National Treasury Management Agency to describe the range of products offered by the Government to personal savers. While An Post is a sales agent for these products, your money is placed directly with, and is protected by, the Government.

Although rates fell in June, these products still offer good value, given the tax relief available. For example, you can earn 11 per cent tax-free after five years with the Savings Certificate product. So if you invested €5,000, you would have €5,550, or a return of almost €550, at the end of the term.

Put your €5,000 away for a decade in a 10-year National Solidarity Bond and you’ll get 35 per cent gross over 10 years, so you’ll come away with €1,750 more. If you’ve got the extra cash and the nerve, these rates are hard to beat.

Your money isn’t locked away: you can have it all back (and any interest due) when you want, though repayment on these two products takes a maximum of seven days. There’s no penalty, but remember the interest is linked to the length of time the funds were on deposit.

Whether you’re in the cash-strapped 35 to 50 age bracket, hit by negative equity, wage cuts and the expense of raising a family, or you’re one of the over-50s who has managed to dodge all of that, it can pay to save. Just remember to shop around.

Examples drawn from bonkers.ie and itsyourmoney.ie