Choosing the right savings option
What are your savings options?
Saving can help you build a savings buffer for unexpected expenses, save for a major purchase like a holiday or car or put money aside for future goals such as buying a house or having children. There are different types of savings products available, offering different levels of access, return and security.
For regular savings – which means putting aside money each week or month – or lump sum savings – which is putting away a lump sum received (gift, inheritance, sale of an asset, redundancy etc.), there are a number of options available to you.
The main savings options available in Ireland are savings accounts, State Savings products and credit union accounts.
What types of savings accounts are available?
Savings accounts are offered by banks and other financial institutions. Different accounts offer different levels of access and interest:
- Demand accounts let you withdraw money whenever you want
- Notice accounts require advance notice before withdrawals
- Fixed-term accounts lock your money away for a set period
Interest rates may be fixed or variable. A fixed rate stays the same for an agreed period, so you know exactly how much interest you will earn. A variable rate can go up or down over time, meaning the amount of interest you earn may change.
What are State Savings products?
State Savings products are backed by the Irish Government, meaning your money is guaranteed by the State. They are offered by the National Treasury Management Agency (NTMA) through StateSavings.ie and An Post.
State Savings includes a range of products, from regular savings and easy-access accounts to fixed-term savings products and Prize Bonds. Returns on most State Savings products are tax free, although interest earned on the Deposit Account is subject to Deposit Interest Retention Tax (DIRT).
How do credit union accounts work?
Credit unions are not for profit community-based organisations offering savings and loans to members.
Whether you can join a credit union depends on its membership rules. For example, some credit unions are open only to people who live or work in a particular neighbourhood, while others are for people working in a particular profession, such as teachers or Gardaí. These eligibility requirements are known as a common bond.
To find out whether you can join a particular credit union, check its membership requirements on its website or contact it directly.
Most credit union accounts allow you to withdraw your savings when you need them. However, some credit unions require members to keep a small minimum balance in their account.
Unlike most bank savings accounts, credit unions generally pay a yearly dividend rather than a fixed rate of interest. The dividend depends on the credit union's financial performance, so the amount paid can vary from year to year and is not guaranteed. The payment is subject to Deposit Interest Retention Tax (DIRT).
If you are interested in joining a credit union, visit the Irish League of Credit Unions or the Credit Union Development Association to learn more about credit unions and the services they offer. You can also ask your employer if they are affiliated to a workplace credit union or visit your local Credit Union
How do you choose the right savings product?
The right option depends on your goals and how quickly you may need access to your money. The examples below can help you identify which option may be worth considering.
| If you want … | Consider… |
|---|---|
| To access your money at any time | Demand/Instant access account |
| To get a better rate with more flexibility than a fixed-term account | Notice accounts |
| To lock your money away for a set period in return for a guaranteed interest rate | Fixed-term account |
| A savings product with no DIRT (tax) on most returns | State Savings products |
| To save with a local member-owned organisation | Credit union account |
These are examples only. The most suitable savings option will depend on your circumstances. Before choosing, compare:
- Interest rates or potential returns
- Access to your money
- Minimum deposit requirements
- Conditions and restrictions
Should you pay off debt before saving?
The interest you pay on loans and credit cards is typically higher than the interest you can earn on your savings. Making overpayments on your loans or credit cards can not only help you pay off your debt quicker but will also mean you will pay less back to the provider in interest.
However, before deciding to pay down debt you should first make sure you have enough money set aside for unexpected expenses, e.g. a washing machine breakdown or an unexpected dental bill.
If you are struggling to manage your debts or make repayments, follow the CCPC’s Debt action plan for practical steps to deal with your debt.
Compare savings accounts
Comparing accounts can help you find the right rate and level of access for your needs.
Use the CCPC Savings account comparison tools to compare rates, features and access conditions across a range of savings products.
When comparing accounts, check:
- The annual equivalent rate (AER) - The Annual Equivalent Rate (AER) shows how much your savings could grow in a year, taking the effect of earning interest on interest into account.
- If the interest rate is fixed or variable
- If withdrawals are restricted
- Any minimum balance requirements
A higher interest rate may come with less access to your money.
What tax do you pay on savings?
Deposit Interest Retention Tax (DIRT) is a tax on interest earned from savings and is taken at source by the financial institution and paid direct to Revenue . Most people have to pay DIRT on their savings interest, but some people qualify for an exemption. You may be exempt from paying DIRT if you:
- Are 65 or over and on a low income
- Have a qualifying permanent disability
- Receive certain payments under the Mother and Baby Institutions Payment Scheme
- Receive a qualifying Cervical Check payment
- Are not tax resident in Ireland.
For more information on those exempt from paying DIRT see Revenue's exemption criteria.
Are your savings protected?
The Deposit Guarantee Scheme (DGS) protects savings if a bank, building society or credit union authorised by the Central Bank of Ireland cannot repay its customers. It protects:
- Eligible deposits up to €100,000 per person per institution
- Deposits at authorised banks, building societies and credit unions
- Current accounts, deposit accounts and share account
Check how the scheme works and which institutions are covered on the DGS website.
Can you save in another EU country?
Yes. As an EU resident, you can open a savings account in another EU country. Before opening an account, check the deposit-guarantee scheme, tax implications, fees and any access rules.
Read more about saving your money in another EU country.
