Irish banks and your money

A guarantee on deposits can be found in your local post office – as long as you trust the Irish Government, say the Daily Telegraph.

"Royal Mail's bank accounts are backed by Bank of Ireland, which means customers will benefit from the Irish government's pledge to protect all Irish banking deposits without limit." said Rosie Murray-West.

As branches all over the country are closing like wildfire, it appears that the Irish bank guarantees could make the trusty PO the safest place to hold new savings while the recession storm blows in from across the Atlantic.

But the savings rates, some of which run as high as 7.05%, depend on the Irish banks' ability to buy sterling on the international market.

"Anglo Irish offers one of the best interest rates on Britain's high street. Its seven-day access account is paying 6.55 percent, while its instant access account is paying 6.4 percent."

"The Post Office, backed by Bank of Ireland, has a competitive 6.2 per cent cash Individual Savings Account (Isa), for those who have not yet invested their £3,600 tax-free savings limit this year, while its Instant Saver offers 5.75 per cent."

Meanwhile Kevin Mountford of Moneysupermarket.com said his website had seen three times more traffic directed towards Irish bank accounts this week than last week. "That's a reasonable barometer that people are taking this seriously," he said.

However, the Telegraph adds that British savers with British banks had not lost a penny throughout the recent problems in the banking sector, and advised them to choose their banks with regard to good interest rates rather than compensation limits.

Meanwhile, The Guardian reports that savers stand to earn negative interest on their deposits following an announcement that inflation reached 5.2% in September.

"The only way savers can be sure their money earns interest in line with inflation is to choose an inflation-linked account," says Hilary Osborne. "National Savings & Investments offers saving certificates linked to the retail prices index (RPI) - currently at 5% - but savers have to commit to locking up their cash for at least a year. Leeds building society offers a similar deal."