High yield savings accounts in Ireland

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Whatever your savings goals are, a high yield savings account can help you to achieve them that little bit faster. Offering higher-than-average interest rates, high yield savings accounts are a good way to grow your savings and make your money work harder.

However, if you’ve never had a high yield savings account, you might be wondering how they work and whether they’re suitable for your needs. Here, we cover the basics of high yield savings accounts so you can decide if they’re the best option for you.

The rundown
  • A high yield savings account typically gives you a higher-than-average rate of return
  • Accounts that require you to lock away your savings for a set period tend to offer the most competitive interest rates
  • Savings of up to €100,000 per person, per institution, are protected under the EU-wide Deposit Guarantee Scheme

What is a high yield savings account?

A high yield savings account is a type of deposit account that typically gives you a higher rate of return than a regular savings account. 

‘High yield savings account’ is an umbrella term that’s used to describe any type of savings account that offers above-average returns. There are various types of high yield savings accounts available, although fixed term deposit accounts tend to offer the most competitive interest rates.

How much more competitive depends on a variety of factors, including the individual product and the current market conditions. In some cases, a high yield savings account may pay an interest rate that’s anywhere between 10 and 25 times higher than that available with a traditional savings account. As you’re no doubt aware, interest rates available from traditional Irish banks are low, with the long term interest rate currently set at just 0.78%.

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What’s the difference between a high yield savings account and a traditional savings account?

One of the main differences between a high yield savings account and a traditional savings account is the rate of return you could get. Regular savings accounts often pay very little interest, particularly in the current economic climate, whereas high yield savings accounts tend to offer much higher returns.

However, in exchange for a better interest rate, many high yield savings accounts, such as fixed term deposits, require you to lock away your money for a set period. This is typically between one and five years, with lengthier terms often paying the highest rates. 

Once you’ve made your initial deposit, you won’t normally be able to top up or withdraw your savings until the account matures at the agreed end date. Some fixed term deposit accounts may also require a minimum deposit. 

As a result, high yield savings accounts generally aren’t as flexible as many traditional savings accounts, which allow you to access your savings whenever you like – but you will get more return on your investments.

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How to calculate interest on high yield savings accounts in Ireland

The interest you’ll earn from a high yield savings account is advertised as an annual equivalent rate (AER). This makes it easier to compare savings rates from a range of providers with different terms.

The simplest way to calculate interest on a high yield savings account is to multiply your account balance by the interest rate and then multiply this by the length of time the money is in the account. So: D (deposit) x R (rate) x T (time) = interest earned. 

The way in which the interest is earned on a particular product may also affect the amount you’ll receive.

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The pros and cons of high yield savings accounts

If you’re thinking of opening a yield savings account in Ireland, it’s important to consider the advantages and potential disadvantages before you commit.

Here’s a summary of some of the pros and cons of high yield savings accounts, but it’s best to speak to a financial adviser for more personalised advice.

Pros

  • Earn a better interest rate than that available with traditional savings accounts
  • With a fixed term deposit account, you can calculate exactly how much interest you’ll earn 
  • High yield savings accounts are very low risk
  • Enjoy peace of mind thanks to the Deposit Guarantee Scheme
  • Even if interest rates drop, the interest rate on your fixed term deposit will stay the same

Cons

  • If you open a fixed term deposit, you won’t be able to access your money during the term
  • The interest rate on fixed term deposits is fixed, meaning that you won’t benefit if interest rates later rise during your term 
  • Some high yield savings accounts have a minimum opening deposit. For example, you need to deposit a minimum of €1000 to open a high yield savings account on Raisin.ie

Is a high yield savings account right for me?

A high yield savings account may be a good option if you’re looking for the most competitive rate of return on your money. Anyone can open a high yield savings account, but fixed term deposits are best suited to long term savings goals, as you’ll need to leave your money untouched for a set amount of time.

If you’re saving for a deposit on a house, a wedding or even retirement, a high yield savings account can be a great way to grow your savings faster.

However, if there’s a chance you’ll need to access your money or you’re looking for more flexibility, a competitive demand deposit account may be more suitable. They’re ideal if you have a short-term savings goal, or you just want to put money away regularly while still earning a high street-beating rate of interest.

Before choosing a high yield savings account, it’s a good idea to ask yourself the following questions:

Some types of high yield savings accounts will only allow you to access your money at the end of your fixed term. Make sure you’ve reviewed your budget plan so you know how long you can go without access to your money.

Not all high yield savings accounts require a minimum deposit amount, but it’s worth checking you have enough spare cash to meet the requirements where applicable.

One of the advantages of fixed term deposits is that you can calculate the amount of interest you’ll earn and whether you’ll hit your savings target before you even open the account.

Some banks may pay interest monthly, while others will pay it as a lump sum at the end of your agreed term.

If a high yield savings account sounds like the right option for you, visit the Raisin Bank marketplace to browse and compare savings accounts from a range of European banks.

Is my money safe in a high yield savings account in Ireland?

Yes. In line with EU-wide regulations, deposits are protected if an institution authorised by the Central Bank of Ireland collapses. The Deposit Guarantee Scheme protects savings of up to €100,000 per person, per financial institution.

Your money will usually be returned to you within 10 working days of your institution failing, although this time limit is due to be shortened to seven working days by 2024.

If you have a high yield savings account with a European bank outside of Ireland, your money will be protected by the scheme in your bank’s country.

Compare high yield savings accounts online

To find the best high yield savings account for you, you’ll need to compare accounts from different providers. At Raisin Bank, we offer an effective, easy-to-use comparison table that lets you browse fixed term deposit and demand deposit accounts from a range of European banks.

Generally speaking, the best high yield savings account will be the one that suits your savings goals and offers the highest interest rate. However, it’s important to read the small print carefully and ensure you’re comfortable with the product’s terms and conditions.

Things to look for are restrictions, fees or penalties, and whether your savings will be protected. If you’re in any doubt, it’s best to speak to the provider or contact an independent financial adviser for advice tailored to your circumstances.

Open a high yield savings account with Raisin Bank

You can easily apply for a high yield savings account through the Raisin Bank marketplace. Simply register for a Raisin Bank Account (it’s free) and choose from a range of competitive high yield savings accounts from our European partner banks all online and from the comfort of your own home.

Once your application has been approved, simply make your initial deposit and then sit back and watch your savings grow.