. You may think that having money in a savings account is a safe and responsible way to manage your finances, but the truth is that it could actually be costing you money. With interest rates at historic lows, many savings accounts are not keeping pace with inflation, which means your money is actually losing value over time. In this article, we’ll explore the risks of leaving your money idle in a low-interest savings account and offer some alternative strategies for growing your savings in today’s economy.
If you currently have money in a savings account, you’re losing money, and not just a little bit, but a significant amount. With inflation still high at 7.7% in March and the average saver earning less than 1% on their deposit, the value of Irish savers’ money is continuing to decrease. Even with interest rates rising to try and slow down inflation, there’s little indication that deposit rates will improve anytime soon. European Central Bank interest rates have gone up, with more expected hikes, but deposit rates remain well below what’s expected. Irish banks aren’t alone in offering low-interest rates, with German banks also accused of doing the same. Banks benefit from low deposit rates because they have a readily available, cheap source of funding as savings remain high. Irish banks have been slower than others to raise mortgage rates, which means borrowers benefit but savers lose out. In a world where there are only three banks offering deposits, competition is minimal. Compared to the eurozone, Irish customers receive lower deposit rates, even on household term deposits, where the eurozone average is 1.64%, Ireland’s rate is just 0.71%. This discrepancy means that Irish customers are not getting the same benefits that other European customers are getting.
. The sad truth is that inflation eats away at the purchasing power of your money every day. That’s why it’s essential to look for ways to make your money work for you, and not the other way around. By investing in assets that generate a return, like stocks, bonds or a well-diversified investment portfolio, you can protect yourself against inflation and maximize your earning potential. Remember, saving is important, but investing your savings wisely is just as crucial. Take control of your financial future today by exploring your investment options and making the most out of your hard-earned money.
