KBC Savings Interest rates

Elessar

Anyone else a bit confused (and a bit pissed off) by the interest earned on their savings with KBC Regular saver? I opened an account earlier in the year to take advantage of their 3% rate which I thought was excellent. Started saving 5 months ago but was a quite annoyed to see they sneakily reduced their rate to 2% recently (December IIRC, the month they were to pay out!). I don't recall getting any notice either.

Then I saw the interest applied to the account this week was actually not the full 2%, apparently because I only started 5 months ago. That only applies to a full 365 days of savings! So in effect I actually got 0.5% interest on my savings. I guess that was partly my fault for not researching, but I'm still pretty miffed by it. I literally would have been better off leaving that money in my current PTSB savings account! I remember when PTSB had a good deal on savings and I'm fairly sure I got the full interest rate even though I only begin saving part way through the year.

Clever b*stards. No doubt the rate will drop again next year so I'm thinking of closing the account altogether. What a complete waste of time!

JTMan

Sneaky and complex offering, yes, but also normal and above board.

Elessar wrote: »

I don't recall getting any notice either.

Notification are online and via press ads. No postal letters. Normal with most banks.

Elessar wrote: »

Then I saw the interest applied to the account this week was actually not the full 2%, apparently because I only started 5 months ago. That only applies to a full 365 days of savings! So in effect I actually got 0.5% interest on my savings.

Normal with all banks. Interest is accrued on a daily basis. If you have the account for 5 months, you will get 5 months interest. If you have the account for 1 year, you will get 1 year interest.

Sarn

I have banked with pretty much all of the banks and building societies and can't remember ever having received notification of a change in interest rate.

Elessar wrote: »

I remember when PTSB had a good deal on savings and I'm fairly sure I got the full interest rate even though I only begin saving part way through the year.

As clarified by JTMan, interest is calculated on a daily basis. Otherwise everyone would lodge all of their money on December 31st and then take it out.

DMcL1971

The interest rate on KBC's Regular Saver account was 3.5% when it was launched back in 2013. It dropped to 3% on 14/07/2015 it then dropped to 2.5% on 23/09/2015 and dropped again to 2% on 12/10/2015.

These days banks do not individually contact account holders about rate changes. It is normal procedure for all banks to post notifications on-line and in national newspapers. The onus is on the account holders to keep an eye out for these changes. Admittedly if you are not actively keeping an eye out for these changes you may not notice until you look at your bank statement or until you check your interest payment at the end of the year.

As JTMan says, all banks apply interest on a daily basis. The figure you see quoted as 2% or 3% is the AER or Annual Equivalent Rate. This means this is the percentage return you would receive if you left the money in for a full year. This is used so that you can make a fair comparison between accounts by comparing their AER's. All accounts are required to display their AER for exactly this reason.

Even at 2% KBC's rate is one of the best out there. If you had left the money in your PTSB current account you would have received either no interest at all or 1% on only the first 1500 of your money (depending on the account). PTSB had great savings rates for quite a while but in the last few months they drastically dropped their rates. All the banks have in fact dropped their rates significantly over the last year. Currently KBC are offering some of the best rates out there.

Many people do not realise how interest is actually calculated on savings accounts. They therefore expect a particular return and naturally are disappointed when they do not receive it. Despite this the banks are not actually doing anything wrong, every bank operates the same way.

DMcL1971

And don't forget about DIRT (Deposit Interest Retention Tax) which is 41%. Once you have received whatever interest you earned at 2 or 3% from the bank. Then the government automatically takes 41% of that directly from your account.

Savings interest rates are currently extremely low, but it is better than no interest at all.