Long-term savings accounts

A long-term savings account, offering fixed interest rates and predictable returns, can be helpful if you’re planning for a financial goal. With fixed-rate options available across the EU, you can compare offers to find the right long-term savings account for you.

Long-term savings accounts usually involve placing a lump sum of money into a term deposit for a set period (for example, one year or longer) during which access to your funds is typically restricted. This type of account might appeal to savers who aren’t planning to use their money in the short term and would prefer fixed returns.

Long-term savings accounts often refer to fixed term deposit accounts, but demand deposit savings accounts or tax-free State Savings products can also be used over longer periods. By keeping savings locked away over longer periods, savers may be able to take advantage of more competitive interest rates than you would get with instant access accounts, but earnings are subject to Deposit Interest Retention Tax (DIRT), (with the exception of government-backed products).

Types of long-term savings accounts in Ireland include:

• Fixed-term deposit accounts: This account type requires you to lock away a lump sum for a set period (with Raisin, three months to ten years) in return for a fixed, usually higher, interest rate.

• Easy access accounts: Demand deposit accounts can be useful for building savings with competitive rates while still having the option to deposit or withdraw money at your convenience.

• State Savings (available through An Post): These include government-backed options like Savings Bonds, Savings Certificates, or National Solidarity Bonds, which typically offer tax-free returns on lump sum investments.

Key features of long-term savings accounts include:

• More competitive interest rates: Products like fixed-term deposit accounts may offer higher interest rates than standard savings accounts.

• Locked-in terms: Some accounts require a deposit commitment of a couple of months to five or more years, resulting in limited access to your funds.

• Higher yields: Due to infrequent access, accounts often offer higher interest rates (AER) compared to demand deposit savings accounts.

• Lump sum focus: Commonly used for depositing large sums of money at once.

• DIRT: Interest earned on savings in Ireland is typically taxed at 33%.

• Deposit guarantee scheme (DGS): Savings accounts are typically deposit-protected up to €100,000 per person, per bank by the national deposit guarantee scheme of the country where the bank is headquartered. This is the case for all savings accounts offered through Raisin.

With a long-term savings approach, you can work towards your money goals, whether that’s to build financial security, enable compound growth, or simply make the most of competitive rates.

Some key benefits of long-term savings include:

• Building savings through compound interest: With some savings accounts, putting away your money for longer periods allows you to take advantage of compound interest, where your money generates interest and those earnings generate more interest over time.

• Diversifying your cash savings: Long-term savings can work as a complementary option for demand deposit or current accounts, and may work well if you have a lump sum of money that can be shut away for longer periods, allowing you to diversify your cash savings.

• Meeting major life goals: Save the funds necessary for large expenses, such as saving for a mortgage, starting a business, or saving for educational expenses.

• Discipline: Maintaining long-term savings habits can encourage financial discipline, and potentially financial freedom, giving you the flexibility to adjust your budget based on your changing life circumstances.

Irish savers could be missing out on the potential growth from long-term savings accounts by sticking to demand deposit accounts. According to a Raisin study, Ireland has one of the lowest savings returns in the Eurozone. Nine out of every €10 are stored in demand deposit savings accounts, but savers are earning an average of just 0.13% interest. Since long-term savings accounts can offer higher interest rates, savers can take advantage of this and let their money work harder.

While there is no one best account type for long-term savings, selecting an option that best matches your individual financial goals can help when choosing what to do with your money. If you're saving a lump sum with a clear time frame in mind, a term deposit could suit your needs. These savings accounts typically offer fixed interest, so your returns are set from the beginning and stay unaffected by volatile market shifts. 

On the other hand, if you want to maintain flexible access to your funds, then you might consider opting for a demand deposit account instead. These options can still give you competitive rates, but you can still access your funds when needed. 

If you’re not sure which type of long-term savings accounts to choose, you can compare the key features of deposit accounts, demand deposit accounts, and State Savings below.

*https://www.statesavings.ie/our-products

To choose the right savings account for you, start by comparing savings account options.

For those looking to access competitive interest rates without complexity, Raisin offers a streamlined way to save. You can explore savings accounts from over 30 partner banks across Europe with interest rates currently up to 3.30% AER. Everything is done online, using just one account to register, compare offers, and select the option that suits your financial goals.

Easily spread your money across fixed-interest term deposits and flexible demand deposit accounts, and manage everything with one login. 

Register for a free Raisin Account today to get started.