Deposit accounts
Whatever your reason for saving, it is a good idea to save some money on a regular basis.
Many savings accounts give you instant access to your money so you can get at it when you need to. Here we explain:
- Types of savings accounts
- How they work
- Differences between fixed and variable rates
- Access to your money
- Factors to consider when choosing an account
- Information you must be given about deposit accounts
You can also read our information on other types of savings accounts, including;
Types of savings accounts
You can choose from a wide range of accounts, depending on how much you want to save and what access you want to your money. Many accounts can be opened with as little as €10 and you can save either regular amounts or lump- sums, and sometimes both. There are no transaction fees or maintenance charges with these accounts, which are available from banks, building societies, An Post, credit unions and state savings.
How they work
These accounts work by adding interest to your savings. Some accounts offer higher interest rates than others, so shop around for the best return on your money.
The annual equivalent rate (AER), or compound annual rate (CAR) will help you compare rates on different accounts. The higher the AER or CAR, the more interest you earn, but remember a higher rate may mean you have less access to your money. The following table shows how €1,000 grows at an interest rate of 2.5% CAR.
| Year | Balance at start of year | Interest (2.5% a year) | Balance at end of year |
| Year 1 | €1,000 | €25 | €1,025 |
| Year 2 | €1,025 | €25.62 | €1,050.62 |
| Year 3 | €1,050.62 | €26.26 | €1,076.88 |
Inflation risk – the risk that your money will lose value or buying power over time. Even a modest inflation rate of 3% will mean that €100 will be worth only €97 after one year.
The difference between fixed and variable rate
Interest rates on savings and deposit accounts may be either fixed or variable.
Fixed interest rates stay the same for a set time so you know what return you will get. You will not benefit from any rate rises but you will not lose out if rates fall.
You usually have to tie up your savings for a set time to get a particular fixed rate of interest. If you need to withdraw early, or want to switch accounts to get a better rate, you may get less interest than the fixed rate you signed up to.
Variable interest rates can fall or rise when interest rates change. If rates fall, you earn less interest on your savings. If rates rise, you earn more. Most variable rate accounts allow you to withdraw your money immediately, so you can always switch your savings quickly if you see a better rate on offer.
You usually have to pay a Government tax (called Deposit Interest Retention Tax or DIRT) on any interest you earn on savings and deposit accounts. If you are over 65, you may be exempt from paying DIRT. You can get more information on the Revenue website.
How do you get access to your money?
Savings accounts give you access to your money either immediately or by giving notice of withdrawal. You can choose between short-medium-and long-term accounts such as:
- A demand account has a variable rate of interest and allows you to withdraw your money immediately if you need it.
- A notice account has a variable interest rate but you must give notice to withdraw money. In return, you get a better rate of interest.
- A fixed-term deposit account – you get a fixed rate of interest if you leave your money for a set period of time, say one or two years. If you need to withdraw your money earlier, you will usually get less interest.
- Guaranteed bonds – these are similar to fixed rate accounts but you may need to invest a lump sum of at least €5,000. You get a guaranteed rate of interest provided you do not withdraw your money until the end of the term, which is generally between three and five years.
Before you choose a deposit account, consider:
- The interest rate
- The access to your money
- Transaction facilities such as an ATM card and standing orders that you may need
- If telephone or internet banking is available
What are the Terms and Conditions of the account, for example:
- Is there a minimum deposit and balance required to qualify for a particular rate?
- Is there a minimum lodgement or withdrawal for regular savings?
- If the account has a variable rate, is there a guaranteed link to some other rate such as the ECB rate?
- Is the deposit for a fixed period? If not, what notice is required to withdraw money?
- With a fixed-term deposit, what penalties must you pay if you want to take out your savings early?
- Can you make regular payments such as direct debits or standing orders from the account and is there a charge for these services?
Information you must be given about deposit accounts
Under the Central Bank’s Consumer Protection Code your bank must give you a statement at least once a year for every account you have with over €20 in it. If you have a term deposit with a term of one year or more, you bank must let you know that it will come to the end of its term at least 10 days beforehand.
Last updated on 16 September 2021
