Bank of Ireland has introduced a tax-free Special Term Account (STA), following AIB's move into the market last November.
STAs allow people to earn up to €480 in interest each year under a three-year option and €635 under a five-year option without paying Deposit Interest Retention Tax (DIRT).
STAs were introduced in the Finance Act 2001 as a compromise with the credit union movement over the issue of DIRT on members' savings.
No withdrawals are allowed during the term of the account. Any interest earned exceeding the amounts above is liable to DIRT at 20 per cent.
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Bank of Ireland's STA requires just half the minimum deposit required by AIB. It pays interest of 2 per cent, fixed for the first 12 months.
