Loan approval is easier. Regular savers with a credit union or a bank are more likely to be approved for a loan to purchase a car, home improvements or a holiday.
Research
Go to www.centralbank.ie in order to find out: 1. What amount of savings are protected by the Central Bank’s Deposit Guarantee scheme?
2. Who funds this protection of savings? 3. Why do you think the Central Bank has a Deposit Guarantee Scheme? Think of at least two reasons.
Did you know?
Interest can describe two different things: (a) Interest on savings When putting money into a bank account, interest describes the money that you can earn on your savings.
Example: Saving €100 in a bank account at 5% interest per year would earn you an extra €5. This would bring your total savings to €105 after one year.
(b) Interest on loans When borrowing money from a bank (or other financial institution), interest describes the extra money you have to pay back on the loan. Example: You borrow €100 from a bank at 10% interest. You will have to repay the €100 plus €10 interest. This will make your total repayments €110.
Notice that you always repay more interest on loans than you earn in interest on savings. This is the main way that banks make a profit.
3. What types of savings products are available? Different financial institutions offer different ways to save your money. The following are the main types of personal savings products available:
(a) Banks and Building Societies Instant Access Savings Accounts (also known as Demand Savings Accounts): Money in these accounts earns interest and can be withdrawn at any time. These tend to offer the lowest rate of interest. Regular Saver Accounts: The saver must commit to saving a minimum amount on a regular basis to get the full rate of interest. Notice Savings Accounts: Money can be withdrawn only by giving a minimum amount of notice, e.g. seven days, one month or three months. These usually offer a higher rate of interest. Fixed-term Savings Accounts: Savings must be kept in these account for
