Why are banks starting to charge us for saving money?

Who would have thought savings could become so problematic? Not so long ago, our personal debt levels were among the highest in Europe, and we were constantly being chastised for our boom-time debt hangovers.

Now it seems like the Irish are the poster children for robust financial health, with record sums on deposit, and an apparent reluctance to divest ourselves of it.

During the summer, Ireland had a savings rate of 35.4 per cent (which is household saving divided by gross disposable income) – considerably higher than the EU average of 24.6 per cent, and greater even than that achieved by the most renowned savers of all, the Germans.

But it seems like if you do enough of anything it can become problem – ask those Dryrobe wearing sea swimmers about their chilblains – and so it is with savings.

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It’s increasingly becoming a problem for the financial services sector here, which is struggling to find a home for all this money the Irish don’t want to spend.

With negative ECB deposit rates, Irish-based banks are being charged to hold this money, and so, unsurprisingly, they have started to pass this on to their customers. After all, with demand for credit muted, there is only so much they can do with the record levels of money on deposit.

So their retail customers are now getting hit with charges. Rather than introduce negative rates on individual savers, both Bank of Ireland and AIB have gone about it a slightly different way, by introducing significant increases in the fees current account holders must pay.

Credit unions, as sizeable depositors with the banks, have not escaped negative rates; this means that when you lodge money with your local credit union, they have to lodge a certain proportion of this as reserves with a bank, and be charged – as much as 1 per cent – for doing so.

But in this game of pass the parcel, the cost must continue to be passed on, and so it is now credit unions that are looking to share the burden of negative rates with their customers, asking them to either reduce their savings below an agreed level, or start to pay every time they either deposit, or withdraw, money from their savings accounts.

While savers might rightly bemoan the impositions – remember the days when you actually earned money for lending it to the banks? – economic watchers might rejoice.

With so much money on deposit, the Central Bank warned earlier this year that "excessively high" savings would drag down economic growth. Disincentivising these savings could be a way of getting people back spending.