BoI launches market-beating 2.5% deposit rate – for children

Young Saver Account will pay interest on balances up to €5,000 at a bonus rate of 2.5%

It’s not fair! Bank of Ireland offers its best deposit rate to the under-12s. Photograph: iStock

It’s not fair! Bank of Ireland offers its best deposit rate to the under-12s. Photograph: iStock

 

Bank of Ireland has significantly upped the interest on offer on one of its deposit accounts from 0.25 per cent to 2.5 per cent. The rate is the bank’s best offering. Unfortunately it is available only to children up to 12.

The Young Saver Account will pay interest on balances up to €5,000 at a bonus rate of 2.5 per cent, dropping to 0.25 per cent on balances exceeding this amount, so it could be a perfect destination for a child’s gifts from their first Communion, for example.

Children who already have an account with the bank will automatically be upgraded to qualify for the new interest rate.

The move comes as the bank ups its offering to younger customers, having linked up with financial literacy expert Frank Conway to produce a new series of money management education magazines for teachers and students in primary schools.

It also comes as deposit rates continue to decline across Ireland. According to the Competition and Consumer Protection Authority, the best return on an instant-access deposit of €15,000 is now just 0.5 per cent – or €75 a year – with Leeds Building Society, while for regular savings, EBS (part of AIB Group) pays 3 per cent on savings up to €12,000.

Bank of Ireland typically pays just 1.35 per cent on regular savings, or as much as 0.78 per cent AER on a lump sum over seven years. It pays zero on demand deposits.

A spokeswoman for Bank of Ireland said the rate increase just applies to the Young Saver at the moment, although it keeps “all accounts under review”.

Parents won’t be able to use the account to boost returns on their own money.

“Parents will have no access to the accounts,” the spokeswoman said, adding that when the child is under seven the parent can open the account and act as a trustee but with no ability to withdraw. After that, the account reverts into the full ownership of the child.