Your savings are under attack, and you might not even realize it. Inflation is silently eroding the value of your hard-earned money, especially if it’s sitting in a low-interest savings account. Here’s the shocking truth: over half of Irish savers are earning less than 1% interest on their deposits. With inflation soaring due to rising food and energy costs, this means your cash is losing purchasing power every single day. But here’s where it gets controversial: are we too comfortable with the safety of banks and credit unions, even if it means missing out on better returns? Let’s dive in.
Irish people are known for their savings habits, with the majority keeping their money in banks or credit unions. According to the Central Statistics Office (CSO), households have been saving around 12.8% of their disposable income this year, nearly matching the 12.7% average since 2023. Collectively, we’ve stashed away a staggering €168 billion in Irish institutions. But are these savings truly working for us?
The problem lies in the type of accounts we prefer. Most Irish savers opt for instant access or demand accounts, which offer meager interest rates—sometimes as low as 0.01%. Even the best rates available today barely reach 3%. Earlier this year, the Central Bank’s Behind the Data research revealed that Irish households’ preference for short-term, accessible accounts cost them nearly €800 million in unearned interest in 2024 alone. And this is the part most people miss: while having immediate access to cash feels secure, it’s often a trade-off for earning virtually no return.
Financial Planner Leah McMahon from Castle Capital warns that this lack of financial planning can leave your money stagnant. “The recent budget was a wake-up call,” she says. “We need to take control of our finances because relying on government support isn’t enough. Everyday expenses are rising, and we must have our own plan.”
Inflation isn’t slowing down either. While headline inflation hovers around 2%, the Consumer Price Index (CPI) for groceries surged by 5.1% from August 2024 to August 2025. Over the past five years, the CPI has jumped by 24%, meaning everything is nearly a quarter more expensive than it was in 2020. So, while your savings might grow slightly, their buying power is shrinking.
The European Central Bank’s (ECB) rate cuts haven’t helped savers. With the key rate halved to 2% in June and held steady since, savings rates remain uninspiring. But why aren’t more people switching to fixed-term deposit accounts, which offer higher returns? Ms. McMahon suggests it’s because Irish savers prioritize quick access to their money, fearing they’ll “get caught out” if they lock it away. However, she recommends better planning to ensure a decent return. “If you’re already saving with a bank, why not take advantage of the 2% or 3% interest rates available?” she asks.
Interestingly, household deposits are at an all-time high, yet many are sticking with low-interest accounts. Richard Kelly, L&G Head of Client Business in Ireland, notes that deposits surged by 13-14% during the Covid-19 pandemic, with no signs of slowing. But here’s a thought-provoking question: Are European savers, including the Irish, too risk-averse? Unlike Americans, who invest more in stocks and capital markets, Europeans tend to hoard cash in low-return savings accounts. While this feels safer, it often means missing out on long-term wealth growth.
For younger generations like Gen Z, the landscape is shifting. Research by Revolut and Dynata found that over a third of Irish Gen Z customers believe stocks and ETFs are better for building wealth than property. They hold the largest share of ETFs (16.5%) in the country. Ms. McMahon notes that Gen Z is more influenced by social media and feels comfortable investing, but she cautions against the risks. “Trading platforms come with fees, and investing in individual stocks requires constant monitoring,” she advises. “Don’t risk money you can’t afford to lose.”
So, how can you beat inflation? Diversification is key, says Mr. Kelly. “Don’t put all your eggs in one basket. Start with savings, then pensions, and finally investments—in that order.” He emphasizes the importance of having cash for daily expenses but highlights the tax benefits of pension schemes. For those with disposable income, investing in capital markets could be the next step.
Here’s the bottom line: Your savings strategy needs a rethink. Are you willing to lock away some money for higher returns, or do you prefer the safety of instant access? And are you ready to explore investments, despite the risks? Let us know your thoughts in the comments—we’d love to hear how you’re tackling inflation and growing your wealth.
