FINDING a competitive savings rate is hard at the moment, and can be even more difficult when you put sustainability into the mix.
Fortunately there are some ethical alternatives to high street banks that can still produce a decent return.
5-Year fixed term deposit at 2.37 per cent (expected rate)
3-Year fixed term deposit at 2.12 per cent (expected rate)
As an Islamic Bank, the company behind this savings bond avoids investment in certain industries. Milestone is run by Gatehouse Bank, which states that it will “only invest funds in ethical goods and services and, for example, does not invest in gambling, alcohol, tobacco or arms”. It invests in real estate and construction as well as sukuk, which are sometimes known as Islamic Bonds.
The accounts pay profit not interest because the payment and receipt of interest is forbidden in Islam as money cannot in itself generate money. Instead the company provides an ‘expected profit rate’. If the company feels that the expected profit rate will not be achieved, it will give reasonable advanced notice of the new expected profit rate and customers can close the account immediately with no penalty and will be given the profit they have earned.
The rates on its fixed bonds are competitive. Although they are not at the top of the best buy tables, they are in the top ten accounts.
Regular Saver, 5 per cent
Yes, you did read that right. Five per cent is an almost unattainable rate these days, which is why this account comes with so many strings attached. For a start, it’s a regular saver, so you can only put £250 in each month – so the maximum interest you’ll get is £81.25. It only runs for a year and you must also have a main current account with Nationwide. You can get your money out whenever you like.
Nationwide is the UK’s biggest building society and scores highly for ethics according to Move Your Money. Holders of joint accounts can open one of these accounts each.
Select access 1.1 per cent
If you want the comfort of knowing you can get at your money whenever you like, you will often sacrifice interest for it. However, Britannia’s Select Access savings account allows you four withdrawals a year without penalty, and you can put away up to £1m in the account. You need to have £500 to open it. Britannia is owned by the Co-operative Bank, and comes under its ethical policy. Although the company is now mainly hedge fund owned, it claims to continue to invest using a strict ethical code.
1.5 per cent 3-year fixed rate
Although not specifically an ethical bank, Metro scores highly on the Move your Money ethical scorecard. Its 1.5 per cent 3-year fixed rate is not earth-shattering in its rate, but it is competitive and straightforward if you are OK to stash your money for three years.
Ethical cash Junior ISA at 2 per cent
Ethical Bank Triodos has launched a number of savings accounts. Although this Junior ISA is behind the best rates on the market, it’s backed by solid ethical principles. Other savings accounts are also available, though none are best buys.
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