The Bank of England has raised interest rates to four per cent – the tenth consecutive increase to tackle runaway inflation.
However, many banks (especially the big, not-so-ethical ones) are slow to pass on rising rates to savers. So if you’re looking to make the most of your savings, this is a good time to consider moving your money to a higher-paying account. Even better, you could choose one that considers the health of people and planet, too.
These range from banks and building societies that pledge not to invest in fossil fuels and other destructive industries, to Triodos – the gold standard of ethical banking – that will only lend your money to businesses and projects making a positive impact on the planet and society.
Here we round up the top sustainable savings accounts – including regular savings, easy access and notice – offering the best interest rates.
Top Regular Savings accounts
What are they? Most regular savings accounts require you to put money away each month with interest paid yearly. They offer higher interest rates than traditional fixed or easy-access savings accounts, but may limit the number of withdrawals you can make, require you to make a deposit every month and/or cap how much you can save. The rate usually only lasts for a set term, so you should consider switching when it ends.
Nationwide Building Society
Account: Start to Save
Interest: Variable five per cent/gross*/AER** for 24 months (after you will automatically be switched to a lower-paying instant access account so set yourself a reminder to reconsider at that point).
Key terms: Increase your balance by at least £25 (but by no more than £50) in each of the six months leading up to a prize draw to be in with a chance of winning £250. You can access your money whenever you like but making withdrawals may affect your entry into the prize draw. Only for Nationwide current account holders.
Why is it ethical? As a building society, Nationwide must hold at least 75 per cent of its assets in residential property, making it far less likely than its big bank competitors to be lending to unsustainable firms. Its profits are also invested back into the business for the benefit of borrowers and savers (it’s “members”) rather than shareholders.
Yorkshire Building Society
Account: Christmas 2023 Regular e-Saver
Interest: 4.50 per cent/ gross*/AER** until 31 October 2023.
Key terms: Open from £1 and save up to £300 per month. Limited access with only one withdrawal day for the term of this product. Interest paid upon maturity on 31 October 2023.
Why is it ethical? Like Nationwide, Yorkshire Building Society is a “mutual” which means it is owned by and run for its members. As all customers are members, this means you get a say. Building societies have a specific regulation which states that a minimum of 75 per cent of their assets MUST be in residential property mortgages. This means they have far less to lend to other organisations and will be having a less negative impact than the banks.
Top 6 ethical current accounts in 2023
Top Easy Access accounts
What are they? Easy access savings accounts allow you to withdraw your savings whenever you like, without penalty. However, they may still enforce withdrawal limits. You may have to give notice of withdrawals and face a short wait before you can get your cash.
Account: Instant Access Savers
Interest: 3.05 per cent/gross*/AER**
Key terms: Save up to £250,000 with no minimum deposit. Instant access to your money. Unlimited withdrawals and deposits.
Why is it ethical? Tandem aims to be a “greener, more accessible bank for people across the UK”. Tandem guarantees that your savings are never used to fund fossil fuel extraction and production or similar destructive industries. Instead, money held in Tandem savings accounts is used solely to fund its lending products.
Its home improvement loans finance energy-efficient improvements such as solar panels and air source heat pumps, saving people money on energy bills while also helping to save the planet. Tandem’s EPC mortgages reward customers who own energy-efficient homes.
What you need to know about: Tandem Bank
Skipton Building Society
Account: Base Rate Tracker
Interest: Variable 2.90 per cent/ gross*/ AER**
Key terms: The rate of interest is guaranteed to track 1.10 per cent below the Bank of England Base Rate for 24 months. Save from £1 to £1 million. Get instant access to your money with no penalties.
Why is it ethical? As well as not investing in fossil fuels, Skipton offsets more emissions than its operations produce. Its partnership with the Yorkshire Dales Millennium Trust will see it plant 30,000 trees from 2021 to 2023. The partnership will also support 400 people from disadvantaged communities to get involved in creating and caring for woodlands.
Leeds Building Society
Account: Limited Issue Online Access Account
Interest: Variable 2.75 per cent/gross*/AER**
Key terms: Minimum deposit £1,000 (you must keep your balance above this amount or the interest rate will decrease to 0.5 per cent). Can be managed online only.
Why is it ethical? Leeds Building Society says it puts “fairness, transparency and good ethical practice remain at the heart” of everything it does. As a building society it will not invest in fossil fuels and all its buildings run on 100 per cent renewable electricity.
Account: Triodos Online Saver Plus
Interest: 2.15 per cent/ gross* / AER**
Key terms: Instant access to your money with no penalties. Three penalty-free withdrawals per year.
Why is it ethical? While the interest rate on its instant access savings account isn’t the highest on this list, Triodos’s ethics definitely are. A Good With Money ‘Good Egg’ firm, Triodos really is the gold standard when it comes to saving your money sustainably.
While you earn interest on your savings, Triodos uses your money to finance projects that are making a positive and lasting impact on society, culture or the environment. It prides itself on being open and transparent about its investments and publishes details of every loan it makes, as well as the positive impact it is making.
What you need to know about: Triodos Bank
Ecology Building Society
Account: Easy Access
Interest: Variable 2.25 per cent/gross*/AER**
Key terms: Minimum initial deposit £25. Save up to £125,000
Why is it ethical? Ecology Building Society is known for its mortgages on eco-friendly new builds and renovation projects. The deposits it holds from savers is used to lend to making Britain’s housing stock more energy efficient. Ecology is a Good With Money ‘Good Egg’ company – this is a mark that is awarded only to companies that make a positive impact in the world.
Fixed term accounts
What are they? With a fixed term (or fixed rate) savings account, you lock away your savings for a set amount of time at a set interest rate.
Account: Three-Year Woodland Saver fixed term deposit
Interest rate: 4.35 per cent “expected profit” (see below)
Key terms: Minimum deposit £1,000. No withdrawals permitted during account term.
Why is it ethical? As an Islamic Bank, Gatehouse avoids investing in industries considered unethical under Shariah principles, which in practice are the same as those frowned upon under Christianity. The firm states 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.
What is “expected profit”? 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.
Account: Ethical 3-Year Fixed Rate Account
Interest rate: Up to 3.95 per cent/ gross*/AER**
Key terms: Minimum initial deposit £5,000
Why is it ethical? Charity Bank was founded to support charities with loans that they couldn’t find elsewhere and to show people how their savings could be invested ethically and in ways that would make them happy. It invests its customers’ money into charities and social enterprises around the country.
** AER stands for Annual Equivalent Rate and provides a means of comparing interest rates by showing what the rate would be if interest was paid and added once a year.
* Gross is the interest without tax deducted.