Bank of Ireland’s latest move comes after it began in October to charge corporate customers for lodging large deposits Photo: Bloomberg

Savers have received a new blow with one of the largest banks in the State planning to cut one of its key deposit rates to zero.

Bank of Ireland is to cut its demand deposit rate to 0pc from March 20, in a move that is expected to be followed by other banks.

The rate comes down from 0.01pc at present.

This is a savings account where customers get instant access to their money.

The bank defended the move, citing market conditions. Earlier this week the European Central Bank left its key lending rate at 0pc.

Bank of Ireland's latest move comes after it began in October to charge corporate customers for lodging large deposits.

Consumers who currently have a Bank of Ireland demand deposit get just €1 in deposit interest for every €10,000 saved. This falls to 61c after tax.

Simon Moynihan of price comparison site Bonkers.ie described the move as "miserly", and warned that other banks may follow suit.

"Bank of Ireland's decision to cut the rate to zero seems rather miserly. It will be the first bank to cut rates to zero for retail customers, but with AIB and Permanent TSB also charging 0.01pc on demand deposit accounts, they may not be the last," he said.

A Bank of Ireland spokesman said: "In the current interest rate market there is a cost for the bank when depositing cash with the ECB, with overnight market rates of approximately minus 0.4pc.

"While our demand deposit account will move to 0pc from March 20, our regular saver, notice, fixed-term and investment offerings continue to provide competitive rates."

Irish Independent