Headline rates may flatter

IN THE wake of the Special Savings Incentive Account scheme (SSIA), banks launched products aimed at attracting the monthly contributions of savers.

Now, for the first time, the Irish Financial Services Regulatory Authority has published a survey comparing the interest rates and features of these accounts.

The interest rates on savings accounts vary from about 3 per cent to more than 7 per cent, which means that savers investing €200 a month for a year would earn over €95 more at the higher rate.

There are six products on the market which offer interest rates of 7 per cent or more, but savers need to be aware of the differences between them.

Irish Nationwide Building Society offers one of the most attractive products on the market. For savers looking to invest €100-€1,000, they can benefit from the best interest rate available at 7.35 per cent. Savers can only make two withdrawals a year without incurring a penalty, however.

Another very attractive interest rate of 7.3 per cent is offered by AIB on its regular savings product. Savers just need to put aside €10 a month to open one of these accounts, but the maximum monthly lodgement is €300, just a little more than that allowed under the SSIA scheme.

Attractive rates of 7.15 per cent and 7 per cent are offered by First Active and Anglo Irish Bank respectively, with First Active accepting monthly contributions of €1-€1,000 and Anglo Irish Bank's limit also set at €1,000. However, a withdrawal from the Anglo Irish account will result in the interest rate reverting to 4.5 per cent.

Less attractive is Bank of Ireland's Easysaver, which offers 7 per cent on monthly savings of €20-€500 and which allows four withdrawals a year without penalty. However, it only offers the 7 per cent rate on the first €5,000 in savings - after that the rate falls back to 3 per cent.

One of the least attractive products on the market is National Irish Bank's regular savings account, which offers just 3.9 per cent in interest, but there is no limit on monthly contributions. There are also no penalties for withdrawals. Similarly, the Rabodirect savings account, can be used for lump-sum investments as well as monthly contributions, and it offers 4.3 per cent on balances up to €1 million.

An Post also offers a low annual interest rate of 3.37 per cent, but it guarantees a rate of 20 per cent over five years, and savers can start with just €25 a month, going up to €1,000.