Irish people could earn nearly four times more interest on their savings by moving their money to a European bank account.
Newstalk reporter Barry Whyte has been examining the interest rates on offer around Europe after Public Expenditure Minister Pascal Donohoe said people could deposit their savings abroad if they weren’t happy with the rates on offer at home.
On Breakfast Briefing this morning, Barry said setting up a European bank account is ‘very straightforward’ – and perfectly legal.
“I thought it would be difficult to set up a bank account abroad,” he said.
“It's not exactly straightforward to set up a bank account here in Ireland, so I assumed it wouldn't be easy to set up an account in another country.
“It is legal to do this and it is actually very straightforward."
Barry said there are several different platforms that can help you set up a European account –including raisin.ie, which offers customers deals from over 400 banks in 30 European countries.
He said he set up an account with Dutch company Bunq and was up and running within a couple of days.
“You have to provide identification and a number of other details, but basically, it was just like setting up a Revolut account, which I think a lot of people have done in recent years,” he said.
“Bunq, by the way, they offer 1.56% interest on your deposit on uninvested cash.”
He said Minister Donohoe was trying to nudge the banks towards offering better deals when he said Irish customers could deposit outside of Ireland.
“He's trying to force them to up their interest rates because they have been, I suppose, stagnant for so long and it's always around 0.1% interest on deposits here,” he said.
“There's one Portuguese bank I came across that offers 3.6% on a lump sum deposit.
“So you could be earning maybe 0.1% in your Irish account and if you're going to be offered 3.6%, it's almost four times more on the interest you're going to get in your savings.”
“Then there’s the French company Younited, they're offering 3.25% on lump sums.
“They're almost like a French version of the credit union, but again, you can set up an account with them if you go through raisin.ie so you can actually get a lot better deals out there.”
MoneySherpa.ie founder Mark Coan told Barry the differences are “considerable”.
“What you would see on a typical return is, if you were to put it in a one-year account, you'd be looking at three to four times as much coming back in terms of interest, if you were to bank with one of the European banks versus one of the Irish pillar banks,” he said.
He said the power lies with the customer.
“If a lot of people vote with their feet and choose to move to European banks, the Irish banks will have to react - and they should be concerned about that - but equally, if people don't vote with their feet, if they don't switch to these products, then nothing's going to change in the Irish banking sector, because why would it change?” he said.
“So, you know, I think there's a power here of the consumer to improve the rates that are available for Irish depositors by getting out there and switching to these options.”