Irish people are committed savers, the majority who save have their money safely in banks or credit unions.
The problem is that over half earn less than 1% interest.
With inflation running high, driven by rising food and energy prices, more than half of savers' cash is losing value in their accounts.
On average households have been saving around 12.8% of their disposable income so far this year, according to the CSO, close to the average of 12.7% since the start of 2023.
As a nation we have around €168 billion on deposit in Irish institutions.
But are these savings giving people the best bang for their buck?
For the most part it would appear Irish savers are losing out on earning interest, in favour of having immediate access to their cash.
Earlier this year the Central Bank's Behind the Data research found that they approximate Irish households’ preference for shorter-term, more accessible deposit account types, relative to average euro area household behaviour cost them almost €800m in unearned interest in 2024 alone.
Financial Planner at Castle Capital Leah McMahon warns that lack of planning or organisation around our finances can lead to money sitting in an account with little or no real return.
"The budget was a stark reminder that we’ve got to do our own work and look after ourselves," advised Ms McMahon.
"The everyday person is saying there’s nothing there for me in the Budget, things are getting more expensive. We need our own plan, be in control, and anything that we get along the way from government supports is a win," she commented.
Inflation is also creeping up, and as it does it is eroding the spending power of savings.
Most people use instant access or demand accounts with interest rates as low as 0.01% rising to 3%, or they just leave their money in their current account with no interest being earned.
According to recent CSO figures, food-price inflation in the year to September rose by 4.7% which is well above the general inflation rate of 2.7%.
What this means is that while your savings may be increasing marginally, what they can buy is decreasing over time.
"We are starting to see headline inflation come back to in around 2%, but the Consumer Price Index (CPI) of groceries has increased by 5.1% from August 2024 to August 2025.
"Then over the last five years from 2020 to 2025, CPI is about 24%, so things are 24% more expensive than they were this time five years ago.
"So, there is a need for people to save on deposit if they need money in the short term."
How have ECB rate cuts impacted on savers?
Falling interest rates are not beneficial to anyone saving or investing money hoping for a good return.
Savers are often affected by the lack of changes or improvements in savings rates.
The European Central Bank halved its key rate in the year to June but has been on hold at 2% since.
Around 3% is the best savings rate available right now, though if you're looking to save more than a couple of thousand euros every month the rate will be closer to 2%.
"There's €168 billion currently on deposit. You could argue the fact that banks really don't need to incentivise us to save, we're already doing that, people are already leaving their money on deposit," explained Ms McMahon
"Between 2006 -2008, the deposit rates would have been better, up as high as 4 % to 5%, because at that time banks were lending, the amount of liquidity that they had wasn't as high, so they were trying to incentivize us to save on deposit, whereas now we're already doing it," she said.
What are the different types of savings accounts?
Accounts for saving your money vary depending on how much or how you want to save and if you want instant access to your cash.
Regular monthly savings accounts are where you save money every month.
Lump sum savings accounts are for saving for a rainy day or for those who want to build up a nest egg.
There are three types of lump sum savings accounts.
An easy access account, which allows instant access to your account and usually has a low interest rate.
A notice account, this means you must usually give 30, 60 or 90-days’ notice. Generally, it has a higher interest rate than an instant account but still gives you flexibility to access your money. These accounts also allow you to add more money at any time, but you must give notice to take it out or you could incur penalties.
And a fixed term deposit account where you put in a lump sum for a specific period in return for a higher interest rate. You cannot add money to it and the amount is locked in for the duration agreed. It can’t be withdrawn during that period without a penalty.
Why don’t more people use fixed term deposit accounts?
Irish people like to have quick and easy access to their money and therefore the majority choose an instant deposit account.
Ms McMahon advises clients to look at savings accounts for one or three years and lock the money away with the potential to earn some interest.
"It's not a bad way to get growth when you know that you don't have time to invest it, but people still, the majority is held on that instant deposit," she said.
She believes people "don’t want to get caught out" if they need money but recommends better planning to ensure they get a better return.
"They're already with the bank, they're already happy to save with the bank, my reason would probably be that organization is something that’s missing in terms of 'when do they need these funds’.
"Because if they are already saving with the bank, I don't know another reason they wouldn't be taking the 2% or the 3% interest rate if they've already had their money with the bank.
With household deposits at an all-time high, why are so many people leaving their money in low interest accounts?
"It’s a very large figure and it seems to have really picked up during the Covid 19 pandemic," said Richard Kelly, L&G Head of Client Business in Ireland.
"I think deposits increased by about 13% or 14% on where they would normally be, and there hasn't been a pullback in that either. We're definitely seeing a lot of people holding cash at the moment and not investing it for longer term," he said.
European, including Irish savers, prefer low risk investment such a savings accounts which offer lower returns.
Mr Kelly said ECB research on the asset holdings of euro area households looked at European behavior and US attitudes to investments.
"Ireland was mentioned in the context of versus the US investors and households generally, and whereas Americans are saving less than Europeans overall, the Americans are actually investing in capital markets and stocks more than Europeans," he said.
"Therefore, they're actually generating higher, longer-term wealth than European investors who are primarily saving more but actually leaving it in deposits and therefore losing returns compared to their American peers," explained Mr Kelly.
However, with these investments there is a level of risk and following the financial crisis in 2008 Irish people are inherently aware of such risk and the need to have savings for that ‘rainy day’, according to Mr Kelly.
"But if you look at it on the other side, if you're a young person these days, and you can save any amount of money and hold it for 10, 20, 30 years, what we call in our industry compounding effect of year-on-year growth, and it will be much more beneficial to them in the long term than leaving that money in overnight deposit rates," he said.
How can you get better rates?
Like anything, you can shop around for better interest rates, however with little competition in the Irish market, the rates are similar in most institutions.
You can switch, but it takes time and plenty of paperwork, many people fear missing things like direct debits, but it can be worth your while if you do your homework.
Irish people can also save in other European banks, interest rates offered by banks vary significantly across the EU and could be more competitive.
However, it’s worth considering a couple of things first.
Savings in Irish banks up to €100,000 are covered by the Deposit Guarantee Scheme, other EU countries have similar schemes but it’s important to check this first.
There is also tax implications for interest earned on savings in another EU country, it would be prudent to find out if it’s worth moving a lump sum before you do it.
Are Gen Z more likely to invest than save?
Recent research from fintech Revolut and research company Dynata found more than a third of Gen Z (18-24) Revolut customers in Ireland claim stocks & ETFs are a more effective route to building long-term wealth than getting on the property ladder.
This age group holds the largest share of ETFs (16.5%) compared to any other in the country.
Financial Planner Leah McMahon believes Gen Z are more clued in from what they see on social media and tend to be more comfortable investing in ETSs in terms of increasing their wealth.
"What I would be mindful of is that with the trading platforms, obviously you have fees, you've currency fees, transaction fees and if you have an investment plan as well, you'd have charges attached to that, so that is one side of it to be clued in," cautioned Ms McMahon.
"There's a lot of watching involved with buying individual stocks and shares and knowing and following up, it is people's full-time job so I'd be cautious about it, I wouldn't be putting anything into it, especially for people that are just figuring it out now, I wouldn't be putting anything in that if you lost it would be a big deal," she advised.
What are the best options to beat inflation?
L&G's Richard Kelly said they discuss diversification a lot with their clients.
"It's not to have all of your eggs in one basket, not to pick one stock that you think is going to let you retire early, the reality is when we're talking to our clients it's about diversification," he said.
He recommends a broad approach to investing to mitigate risks and achieve a smoother return.
His advice for most people is to consider their individual priorities, but savings, pension and investment in that order is usually a good start for diversification.
"The reality of most people is they want to make sure that they have cash on hand to pay day-to-day bills," said Mr Kelly.
"But the benefit of the tax incentives for pension schemes would make that very much a second for me," he said
"And then the investment accounts are for those people in a lucky position where they have disposable income after their day-to-day expenses and their pensions contributions, then to invest in some type of capital markets."
