Hello representative of Rabodirect, it is nice to see you commenting on this site. Can you tell us if you intend to raise interest rates anytime soon on your deposit accounts as your rates are pretty abysmal at the moment??
Hello representative of Rabodirect, it is nice to see you commenting on this site. Can you tell us if you intend to raise interest rates anytime soon on your deposit accounts as your rates are pretty abysmal at the moment??
Breakage costs for term deposits are worked out as follows:
We look at the actual term and the length of time left to run on the term deposit. And we look at the rate which was available when a customer opened the account versus the rate that applies for the same term at the time the customer is looking to break the term deposit.
I call this risk/reward.
Rabo are AAA rated (same as German government). They 4.40% which is above the 10 year German Government Bond yield of approx 3.30%.
On the other hand ultra-risky Irish banks are paying Joe Punter an "abysmal" 3.60% for cash, albeit at a shorter term such as 1 year. Irish Government bond yield for 10 years is 9.50%. Is there any Irish bank offering even close to this kind of return? In my opinion, Irish Government-guaranteed banks such as AIB, Bank of Ireland, and PTSB should be paying a much higher rate to reflect the riskiness of the Bank (Government). But hey - that's why 10's of billions of deposits have left the banks.
Yes - the fact that the OP was told his principle could be subject to penalties as well would warrant some clarity imo
Good point Mark.
The 4 Irish banks need to pay a risk premium to deposit holders to attract deposits. With market paying 9.70% for 10 year Irish debt and 2 year Irish debt rates doubling in recent weeks, logically, the risk premium should be significantly over current deposit rates.
PTSB where I have deposit at present gave me clarity. They have an actual formula which you can calculate yourself and the principle is never affected. It is part of the T&Cs when you take a term deposit. RABO is a moving target unfortunately
(b) offer deposit rates well above EU competitor rates and design T&Cs that match the substantial risk of depositing here.
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