# Deposits

Discussion in 'Deposits' started by Abbeys, Dec 2, 2016.

1. ### AbbeysNew Member

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2
I have 12,000 euro at the moment in a deposit account earning 0.6% gross. What is my best option, open a 12month fixed rate account at 1.05 % gross, or open a regular saver account at 3% gross, max lodgement is 1,000 per month.

Abbeys

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1,220
Covered lots before on site. However it's about E125 for lump sum deposit, E197 for regular saver. Minus 41% DIRT then for both.

3. ### dub_nerdFrequent Poster

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1,223
Last edited: Dec 2, 2016
If you feed it from your deposit account into the regular saver you will get:

$\frac{n-1}{2n}R_D+\frac{n+1}{2n}R_R=\frac{11}{24}\times0.6\%+\frac{13}{24}\times3.0\%=1.9\%$

... where n is the number of installments (i.e. 12 for monthly) and the two R's are the rates for the deposit and regular saver accounts. Total return from the two accounts combined before tax is 1.9% assuming there are no transaction charges, set up costs etc. Assuming you are not liable for the 4% PRSI as a chargeable person you will make 1.16% net return after 39% DIRT (the rate for 2017). On €12,000 this is €139 compared to €44 after DIRT at 0.6% or €77 after DIRT at 1.05%.

Last edited: Dec 2, 2016
4. ### DMcL1971Frequent Poster

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254
I don't understand what dub_nerd said but username123 is correct. However the 3.00% is a variable rate and may drop during the 12 month period.

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My calcs were for isolated regular saver and lump sum. dub_nerd has done more thorough calculation where he uses the E12k from lump sum deposit to drip feed the regular saver, thereby getting interest from both accounts.
This was fairly standard practice years ago when interest rates weren't on the floor. I wouldn't be bothered with the hassle now to be honest, as difference between mine and his results are tiny.

6. ### dub_nerdFrequent Poster

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As username123 says, his calcs are as close as makes no difference. Not only would I not be bothered with the extra from the deposit account, but I wouldn't be bothered with the regular saver at all for an extra €8/month after tax on €12,000. Rates are just to low for the hassle of chasing extra fractions of a percent. I only did the detailed calculation to remind myself of that.

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I'd suggest OP to open KBC regular saver, which is 3.5% if you have current account. This allows lump sum deposit of 10k, so you get 3.5% on the 10k plus on your 1k per month regular saver. This saving account is listed in best buys thread I believe.
This would bring annual interest up to about E580 before DIRT, much better.

8. ### CiaranT.

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4,347
Seconded with opening a KBC Extra Regular Saver being the way to get the best return. The rate is 3.00% AER variable, not 3.50%. Also, given that a once-off lump sum is allowed, the normal regular saver formula for interest calculations does not apply.

There are a number of steps to go though including opening a KBC Extra Current Account an depositing at least 2,500 EUR per month into the current account which you can wire back out straight away. Hassle but worth it.

The best buys have more details on the other terms.