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Negative Deposit Rates

24 November 2020
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Negative Deposit Rates


Irish Banks are now charging up to 0.65% and 1.10% for holding certain cash deposits. Presently Pensions, Corporates and Credit Unions amongst others are being charged negative interest rates.


This is because banks have been charged for their deposits with the European Central Bank since 2014 and are only now starting to pass on the impact of this to customers. According to the Irish Central Bank, households had €110 billion on deposit at the beginning of 2020. As a result of the global pandemic, this level has increased to a total of €121 billion based on the latest figures.


It is understood that Irish banks will turn their attention to all consumer deposits next year sparing perhaps only small deposits. How long negative interest rates are imposed on consumers will very much depend on the outlook for growth and inflation in Europe. Most economic commentators forecast that we are likely to experience a low growth low inflation environment for the foreseeable future.


In this scenario, bank customers will suffer losses in the value of their deposits. Added to this is the risk to the real value of savings – the primary threat to which is inflation.


To counteract negative interest rates investors will have to consider moving some of their cash deposited in Irish financial institutions into assets such as equities, fixed interest, alternatives and property. These type of assets can form part of a well-managed multi-asset fund that targets an appropriate level of risk to achieve their long-term investment objectives. Investing into multi-asset funds should be considered for investors who are willing to leave their cash invested for number of years, whilst retaining a certain portion of their cash on deposit for short-term liquidity purposes.


If you are concerned about the impact negative interest rates will have on your cash and want to explore other options, please do not hesitate to contact one of our experienced investment advisors.


Contact us @


Dublin:     +353 1 294 7600

Cork:        +353 21 480 8041

By Paddy Swan & Richard White

Director & Senior Investment Consultant