It can be easy to forget that where we keep our money has consequences beyond our own saving potential.
The cash you keep in a current account doesn’t just sit there until you decide to withdraw it. Banks and other financial providers use our money to make more money (usually for themselves) by investing it. Unfortunately, this means that large chunks of our earnings are funnelled into practices that are harmful to the environment such as fossil fuels, tobacco, oil, or arms production.
Ethical banks avoid investing in environmentally harmful or otherwise unethical industries, and a minority – such as Triodos – go much further by investing your money to make positive impact on the planet and society.
With the Current Account Switching Service, which takes care of transferring all your direct debits to your new account and closing your old one, it’s easier than ever to move your money for Good.
The five providers below rank highly on the ethical stakes.
1. Triodos Bank
Triodos Bank sits firmly at the top of our list of ethical current accounts. Founded in 1980, Triodos believes that banks should be an active source for good and will only lend your money to organisations that are committed to making a positive social, environmental or cultural impact.
It also publishes details of each investment it makes on its website in the name of total transparency.
The Triodos mobile banking app allows you to monitor your balance and spending, including alerting you when you’re down to your last £100; when you have insufficient funds to make a payment and can help keep track of your daily card use at home and abroad.
It also has a biodegradable contactless card made from renewable resources like plant leaves and corn.
Triodos was granted a UK banking license in 2019, so current account holders assets are protected under Financial Services Compensation Scheme (FSCS), which covers up to £85,000 per person. It is also Ethical Consumer’s Best Buy for Current Accounts.
There is a £3 monthly for its current account, and a competitive 18 per cent (variable) interest rate on an agreed overdraft up to a maximum of £2,000.
As Britain’s biggest mutual, Nationwide says “the fact that we are owned by our members and run for their benefit, makes us fundamentally different from our big competitors.”
Nationwide recently reintroduced an incentive for switching to its current account. If you’re a member (have another financial product such as a mortgage with Nationwide), you could get £125 while for non-members its £100. You must switch at least two direct debits to be eligible.
The building society continues to offer a competitive package for those looking to switch their current account. Its FlexPlus current account comes with a £13 per month fee, but if you make use of the free insurance that comes with it (the travel, mobile and breakdown insurance could be worth more than £500 a year in total) it’s an attractive option. Just be sure to check the restrictions as, for example, Nationwide’s travel insurance will not cover cancellations due to the coronavirus pandemic unless it is for medical reasons.
Nationwide also offers a FlexDirect current account, which has no monthly fee and comes with two per cent interest on balances for the first 12 months before reducing to 0.25 per cent – interest on current account balances is an unusual perk in the current financial climate. To qualify for this account, you must pay in at least £1,000 per month. You’ll pay no overdraft interest for the first 12 months, followed by a steep 39.9 per cent (as with all its current accounts) so it pays to stay in credit.
Nationwide has currently “paused” its refer a friend scheme – which would have seen you share £200 for the switch if you are referred – due to the coronavirus crisis. The building society says it hopes to have the scheme up and running again in the future.
The Cumberland is a building society based in Cumbria. It offers current accounts, as well as mortgages and savings accounts, to customers living in Cumbria, South West Scotland, West Northumberland and North Lancashire.
It does not invest its members’ money in stocks and shares, so many of the issues normally associated with ethical investment do not apply to it. In the last financial year, it donated more than £100,000 to support local community, educational and charitable initiatives.
Its Cumberland Plus Current Account has no monthly fee and the interest on an arranged overdraft is 14.99 per cent, which is low compared to its competitors.
For those who want to support local credit unions, the Engage current account acts like a bank account, but is run by credit unions, supporting local communities and those who might otherwise be unable to open a bank account. There are some fees on the account, which include a “monthly maintenance fee” of £2, charges for cash withdrawals (75 pence on the classic account) and international purchases (£1 plus 2 per cent of the transaction). There is also no overdraft facility, which reflects its responsible lending policy.
The scheme does offer cashback on spending with supported partners, however, including Marks and Spencer, Argos, Pizza Express, Debenhams, New Look and B&Q. While funds are segregated, they aren’t part of the UK compensation scheme.
Engage’s ‘virtual savings envelopes’ feature can help you budget for things like utility bills, rent or mortgage, council tax or big purchases. When your payments are due, Engage will automatically pay them by standing order or direct debit, or release your saved funds back into your account to spend by debit card or to withdraw cash.
App-based bank Starling – voted “Best British Bank” at the British Bank Awards 2021 – expressly avoids fossil fuels, mining, arms and military, and instead invests in “government securities and other high quality liquid assets”.
However, it is worth noting that despite its longstanding opposition to fossil fuels, in March 2021 Starling accepted funding from Qatar’s sovereign wealth fund. The fund was set up in 2005 to invest Qatar’s substantial oil and natural gas revenues around the world.
A spokesman for Starling Bank said that “one of the key roles of QIA is to reduce Qatar’s dependence on revenues derived from oil and gas and to expand investment into non-hydrocarbon sectors. That’s one reason why it has been investing in a range of well-known British brands in addition to Starling.”
Since Starling is a paperless, branchless bank, its carbon footprint is significantly lower than some of its competitors.
There are no monthly fees and arranged overdraft interest is charged at 15 per cent, 25 per cent and 35 per cent EAR (variable) based on factors such as your credit rating.
Founded in 1890 as the Salvation Army Bank, Reliance Bank’s mission is to “stand out as a bank with a Christian and ethical conscience.”
It donates up to 75 per cent of its profits to the Salvation Army – which retains control of the bank despite the name change – to support the organisation’s evangelical and charitable work around the globe.
Reliance Bank offers its customers a full range of services including current accounts, savings accounts, mortgages and loans. In line with its ethical stance, it prioritises its business lending to organisations delivering positive social impact in the UK.
It also outperforms High Street banks for customer satisfaction, according to the 2021 Charity Finance Banking Survey.
If you want to have a savings account, insurance policy, investment fund or mortgage from companies that do the right thing, check out our Good Eggs.
These are companies that have passed strict (independent) criteria to prove they make a positive impact – to the planet, society, and you.