Is Revolut's new savings account beating the banks? Here's what the experts say

Online bank Revolut has announced that it will roll out an instant access savings account offering an interest rate of 2 per cent for a free account, rising to 3.49 per cent for accounts that charge a monthly fee.

These figures are far in excess of what the traditional Irish banks currently have on offer, and throws into sharp focus the pressure so-called neobanks are now bringing on to the likes of AIB, Bank of Ireland and Permanent TSB.

The company also said that customers will be able to earn daily interest while also having access to their funds on-demand.

This is in sharp contrast to the methods used by other banks in Ireland, which use "term deposit accounts", meaning that customers have to keep the money in their account for a period of time (usually a year) to receive interest benefits. 

Are these new interest rates beating Ireland's biggest banks?

Simon Barry, an independent economist told the Irish Times that “even the lowest interest rate on Revolut’s new instant access account offering is 15 times higher than the prevailing average rate available to households from other Irish credit institutions in the key overnight market segment”.

Irish Independent columnist and financial coach Sinead Ryan weighed in on the debate in a video posted on social media.

In a post on social media, Sinead first clarified that the news was welcomed, as "competition is great". She went on to say the premium 3.49 rate offered by Revolut is "beating anything on the market", but pointed out the requirement of having an ultra account with the online bank to get it.

A note on Revolut's new deposit rates. pic.twitter.com/GmpuhUq1GB

— @sinead_ryan (@sinead_ryan) May 23, 2024

"That ultra account costs 55 euro a month, so it's a really expensive account that you have to have to qualify for," she said.

"Their basic account offers 2 per cent interest, which is fine, but it doesn't beat AIB, EBS and Bank of Ireland who are all offering 3 per cent. So do your homework, check CCPC or bonkers.ie before making your mind up."

Daragh Cassidy of price comparison site Bonkers.ie pointed out a drawback of using the Revolut account full time, citing the issue of Iban discrimination. There have been reports of some businesses and agencies in the past refusing to accept payments tied to accounts with Lithuanian Ibans, as Revolut did, although it has since rolled out Irish Ibans for customers here. N26, too, uses German Ibans.

Price comparison site Bonkers.ie have advised Irish banking customers that Revolut "isn’t the only provider offering good instant-access rates of interest right now", saying that it’s important to review all the options that are available out there.

According to the financial advisory site, Trade Republic, a German digital investment platform, is offering customers 4% interest on any uninvested cash on amounts up to €50,000.

While N26, the German online-only bank which is one of Revolut’s main rivals, offers 2.8% interest for standard account holders and 4% interest with its top-tier ‘Metal’ account. It also places no limit on the amount you can deposit.

And Raisin, an online marketplace for savings account providers across Europe, currently offers rates above 3% from its partner banks across Europe. Finally Bunq, the Dutch online-only bank, offers customers a rate of 2.46%. In short, there are lots of options out there for your money so be sure to get the best rate for your particular circumstances.