AIB cuts interest rates again: What will it mean for savers?

Thousands of savers at AIB will earn no return on their money from next January, as the bank slashes most of its deposit rates to zero against a background of global ultra-low rates.

However, with inflation now running at an annual rate of -1.2 per cent, savers won’t yet see a “real” erosion on the value of their money.

From January 12th 2021, AIB will cut rates on 10 of its deposit offerings to zero, although savers won’t be unduly hit, as the rates were already at rock bottom. For example, those who had money in the bank’s demand deposit account previously earned 0.01 per cent on their savings, while the bank paid those in its seven day notice account a return of just 0.02 per cent. Both accounts have now been cut to zero.

In a statement, the bank said that it has “successfully insulated 99 per cent of our customers during a sustained period of European negative interest rates. We continue to do so, while keeping our pricing for large deposits under constant review.”