I have an Offset Flexible Mortgage with First Active and currently the interest rate is 4.9%. I intend to save €500 per month in it so that I can reduce the interest of the mortgage. With 4.9% as the benchmark and taking into account DIRT at 20%, am I right to say that if I choose to save the money in another savings account, I would need a savings account that pays an interest rate of at least 6.125%?
I know that AIB is pay 7.1% AER (or is it EAR)? Does it mean that 7.1% is the interest rate that they will pay per year? If so, should I not go with AIB? I have read the Financial Best Buy section but am confused with regard to the rates given? Are they annual rates or is it something else?
Thanks.