Revolut is to launch a savings account with a 2% interest rate in another major intervention in the banking industry. 

Currently, most Irish people keep the majority of their savings in a current account that allows them easy access their funds. 

The tradeoff is that the rate of interest is extremely low. 

“If you want to get that money immediately with no penalty - what we call demand accounts - you’re talking about an average of 0.13% - so a fraction of 1%,” Charlie Weston of the Irish Independent told The Pat Kenny Show. 

“They pay very poor value. 

“[They lend it to mortgage holders] at 4.3% and if they deposit some of it in the European Central Bank, they’ll get 4%.”

Regular Revolut card. Credit: Panther Media GmbH / Alamy

90% of household savings are kept in demand accounts and if they were transferred into savings accounts with higher interest rates, the result could be transformative for the economy. 

“We’re talking here about €153 billion in household savings, so if 90% of that is earning nothing virtually and the banks can loan it out at 4% for a mortgage or put in the European Central Bank,” Mr Weston said. 

“It isn’t difficult to be a bank manager at the moment; they’re awash with profits and you can see why when you hear those figures.”

Revolut savings accounts 'likely to be popular'

Revolut has around 40 million customers around the world and has gradually been adding products to its array of services. 

Users can apply for loans, credit cards and even motor insurance. 

“One of the missing bits was a savings account and they’ve come in now with a savings account,” Mr Weston said. 

“Depending on the sort of current account that you have with them, you can get up to 3.49% [interest] with them. 

“If you have a standard account… you get 2% annual equivalent rate and that’s an awful lot more and that’s a demand account as well. 

“So, a hell of a lot more than the average of 0.13% from the banks, so it’s likely to be popular.” 

If there is one criticism of Revolut that Mr Weston has it is their custom service and he urged them to “raise their game” in this aspect of their business. 

“There’s a lot of scamming that goes on with Revolut accounts for some reason,” he said. 

“It can be difficult to be resolved because there’s no branch you can go into, they don’t have manned phone lines, so you have to operate through a chat box. 

“So, if you have problems with Revolut, it can be difficult to resolve that issue.” 

Revolut has 2.7 million customers in Ireland.

Main image: Euro banknotes.