🌱 BeginnersWhat is a savings account and how much does it pay?
A savings account is the simplest way to save in Ireland: you put money in, the bank pays interest, and you can take the money out when you want. The rate is variable, which means the bank can change it at any time — it usually tracks the European Central Bank's rates with some delay. The main value of a savings account is safety and access, not return: this is where your emergency fund and money you might need at short notice should sit. In this guide we cover how the interest is worked out, how it is taxed, what the Deposit Guarantee Scheme covers, and when it is time to move the money somewhere else.
How interest on a savings account works
The rate is always quoted per year, but it accrues on your balance over time and is usually credited once or twice a year. If you have €20,000 in an account paying 3% a year you earn roughly €600 in interest over a year, before tax, assuming the rate and balance stay the same. Because the rate is variable it can go up or down during the year — so always compare the current rate, not an old figure in an ad.
Some banks offer a higher rate for the first few months and then cut it, others attach conditions such as the rate only applying up to a certain balance or requiring that you make no withdrawals for a period. Read the terms before you move money, and check whether there is a cap on the amount that earns the headline rate.
DIRT and the Deposit Guarantee Scheme
Interest on a savings account is subject to Deposit Interest Retention Tax (DIRT), currently 33%, which the bank deducts at source before paying you. State Savings products from An Post (Savings Certificates, Savings Bonds, Prize Bonds) are not subject to DIRT, which is part of why they are popular for tax-free saving. When you compare a savings account with State Savings, remember that the savings account's rate is reduced by DIRT.
Deposits held with a bank authorised in Ireland are protected up to €100,000 per person, per institution, by the Deposit Guarantee Scheme, administered by the Central Bank of Ireland, if the bank fails. A joint account is covered up to €100,000 per account holder. There is a temporary higher limit for certain life events, such as the proceeds of a house sale, for up to six months.
When a savings account is enough — and when it isn't
A savings account is the right place for your rainy day fund, for money for a trip next year, and for a house deposit you will use soon. The point is that the amount is safe and reachable, not that it grows as much as possible.
For money you will not touch for five years or more, inflation eats a large part of a savings account's value — that is where broad, low-cost investment funds are a common alternative, with the risk that involves. A common approach is to keep the rainy day fund in a savings account and long-term savings in funds.
Frequently Asked Questions
- How much interest does a savings account pay in Ireland right now?
- It changes with the European Central Bank's rates and differs between banks. The pillar banks' basic accounts often pay less than digital banks and regular saver accounts. Always compare the current rate after DIRT (33% on the interest) before you choose.
- Is the money in my savings account protected?
- Yes, up to €100,000 per person, per institution, if the bank is covered by the Deposit Guarantee Scheme. If you have more than that you can spread the money across several banks to stay under the limit at each one.
- Savings account or State Savings — which is better?
- It depends on the term and on tax. A savings account is flexible but the interest is taxed at 33% DIRT. State Savings products from An Post are DIRT-free and state-guaranteed, but fixed-term products lock your money away. Many people use both.
Informational content, not financial, tax or legal advice. Check amounts, limits and current rules directly with the official sources (the Department of Social Protection, the Central Bank of Ireland, Revenue, the Deposit Guarantee Scheme) before making a decision.
