END OF FREE BANKING

Permanent TSB (PTSB) will stop paying interest on current accounts from tomorrow (Monday) and make it more difficult for new customers to set up free banking, according to The Sunday Times.  The strategy has been a cornerstone in the bank’s drive for increased market share and 450,000 of its customers have a guarantee they will never incur transactions fees or charges.

However, the bank reported losses of €131m for the first half of the year and tomorrow’s move is part of a strategy (which has included squeezing those customers on variable rate mortgages) designed to return it to profitability.

The move brings it into line with AIB and Bank of Ireland, both of which impose qualifying conditions for free banking. Bank of Ireland claims 750,000 of its 1m customers do not incur charges and AIB said all its customers were eligible for free banking but did not say how many actually paid no fees.

PTSB will also stop paying interest on new current accounts opened from tomorrow; existing customers will continue to earn 2% on balances up to €1,500.

Also, the newspaper’s Money section looks at alternatives for savers who want to put their money elsewhere than a bank but with minimum or no risk to their capital. The list of options includes forestry, tracker bonds, gold and government bonds.