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What is a savings bond?

A savings bond is essentially the same as a fixed-term savings account. You deposit a lump sum for a fixed period of time and receive a fixed interest rate. You cannot access your savings during the agreed duration. However, banks often offer higher interest rates on savings bonds than demand deposit or easy-access accounts, as they know in advance how long they’ll have your money.

In Ireland, Post Office (An Post) savings bonds are available as a form of state saving, but this isn’t your only option.

Key takeaways
  • Ireland State Savings are fixed-term savings accounts offered by the state

  • The minimum duration for a savings bond is three years

  • Understanding AER is key to finding the best fixed-term savings account for you

Savings bonds, savings certificates, National Solidarity Bonds: What is the difference?

In Ireland, the term “savings bond” often refers specifically to fixed-term savings accounts offered by the state, operating under the brand name Ireland State Savings. The savings bonds are offered by the Minister for Finance in Ireland, who acts through the National Treasury Management Agency. This is the agency responsible for managing the Irish national debt. The Irish government uses the money you save with them to fund government expenditure.

Savings bonds

Under Ireland State Savings, a savings bond(also known as Ireland Post Office savings bonds, or An Post savings bonds) is a three-year fixed rate savings account. State savings bonds are considered a very safe investment, as the government is legally obliged to repay the money. Savings placed in an Ireland State Savings Bond or Savings Certificate are also tax-free, including DIRT, income tax, universal social charge and social insurance (PRSI). The minimum investment is €50, while the maximum is €120,000. This increases to €240,000 for jointly held savings bonds.

Savings certificates

Savings certificates last 5.5 years and offer a slightly higher rate due to the longer duration. These are also tax-free. As with savings bonds, the minimum investment for savings certificates is €50, while the maximum is €120,000 for individuals and €240,000 for joint holdings.

National Solidarity Bonds

Available for a duration of either 4 or 10 years, these are considered a mid to long-term investment. As the market interest rates can alter a lot in ten years, signing up to a ten-year bond could mean that the agreed rate ceases to be competitive by the end of the term. The same investment amount applies as for savings bonds and certificates.

Are saving bonds in Ireland a good investment?

While there are periods when Irish State Savings products boast impressive rates for bonds,the state isn’t always able to offer competitive rates. When the government has greater liquidity, it can afford to reduce interest rates.

As with most fixed term savings products, if you attempt to access your money before the end of the fixed period, you are likely to lose any potential returns.

It’s worth doing your research to make sure you are getting the best interest rate, as often you will be able to find higher rates than An Post savings bonds.

Broadening your banking horizons: High-interest savings bonds abroad

Raisin Bank enables savers to access higher interest rates than those available in Ireland. We’re keen to break down the barriers in European banking. And the best bit? It’s completely free. No hidden costs, no introductory rates, no ongoing costs. Just simple fixed-term savings accounts you can manage entirely online and in your language.

How do I find the best savings bond for me?

Be wary of “total return” – concentrate on the AER

Often, the “total return” is highlighted for Irish State Savings products. This is a calculation which takes into account how much you would make over the course of, say, a ten year deposit, factored into the initial investment amount. However, it is stipulated in the Irish Consumer Protection Code of 2012 that the percentage AER must always be shown, as this is a much more meaningful figure.

For example, if you were to put €1,000 into a savings bond for ten years, you would get back €1,160. This €1,160 is a 16% increase from the original amount, but it is misleading as you might think based on the advertised 16% return that you would get 16% interest per year. However, this is in fact an AER (annual equivalent rate) of 1.5%, which you then earn 10 times (once per year).

The key figure to look at when selecting a savings bond is therefore the AER (annual equivalent rate). As of February 2024, the top AER offered by Ireland State Savings is 2.01% for a 10-year National Solidarity Bond. While this is not subject to DIRT, the interest rates are lower than similar fixed-term accounts in mainland Europe with shorter durations.

Raisin Bank: Greater flexibility with transparent rates

The minimum duration for an Ireland State Savings bond is three years, while our current minimum savings duration is just three months. Savers still benefit from the security of a guaranteed interest rate, but with a wider choice of savings terms to choose from than with Post Office savings bonds. Simply compare the offers in the table above and find your perfect match.

With Raisin Bank, you can open as many savings bonds with different banks as you like, and our handy online banking system enables you to keep track of all your savings in one place.

And it’s never been easier to save within Europe. Your savings are protected under the European deposit guarantee scheme (EDIS). This scheme protects up to €100,000 per person and per banking institution, anywhere in Europe. This amount of course includes any interest you make on your deposit.