After years of low interest rates, savers are finally being offered better returns on cash savings accounts.
Earlier this month, the Bank of England raised the base interest rate to four per cent in a bid to temper inflation which has surpassed an eye-watering 10 per cent. Although this sky-high inflation means that cash will inevitably lose value (even on the best savings rates out there) over time, it’s always a good idea to have a rainy day fund that you can dip into easily in an emergency.
The idea of saving may feel alien to those struggling with the rising cost of living, but even a small amount set aside consistently every month can eventually add up to a healthy pot.
If you care about the future of the planet as well as your own, then interest rates won’t be the ONLY important factor you consider when choosing a cash savings account.
Ethical banks and building societies will not invest in fossil fuels and other destructive industries like tobacco and weapons, and some – like Triodos – go so far as to only lend your money to businesses and projects that are making a positive impact on the planet and society.
Here are our top sustainable instant access savings accounts currently offering the highest interest rates.
1. 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 it’s worth reconsidering 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. 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.
2. Skipton Building Society
Account: Easy Access Saver
Interest: Variable 2.85 per cent/gross/AER*
Key terms: Minimum deposit £1.
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.
3. Tandem Bank
Account: Easy Access
Interest: Variable 3.05 per cent/gross/AER
Key terms: No minimum deposit. Manage your account online.
Why is it ethical? A digital challenger bank, 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.
4. 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.
5. Leeds Building Society
Account: Limited Issue Online Access Account
Interest: Variable 2.75 per cent/gross/AER*
Key terms: Minimum deposit £1,000. 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.
6. Nationwide Building Society
Account: Flex Instant Saver
Interest: Variable 2.25 per cent/gross/AER* for 12 months (after you will automatically be switched to a lower-paying instant access account so it’s worth reconsidering at that point)
Key terms: Only for Nationwide current account holders.
7. Co-operative Bank
Account: Online Saver
Interest: Variable 1.84 per cent/gross/AER*
Key terms: Only for Co-op current account holders. Minimum £1 deposit. Manage online and on mobile only.
Why is it ethical? The Co-operative Bank is the only bank to have a “customer-led” ethical policy. Taking into account customer views, it takes a strong stance on fossil fuels, climate, labour rights, indiscriminate weapons and animal welfare. However, in 2017 the bank was bailed out by international hedge funds. Although they continue to proclaim it as an ethical bank, for many the sale put a question mark over the integrity of its ethical policy.
8. Triodos Bank
Account: Online Saver Plus
Interest: Up to 2.15 per cent/gross/AER*
Key terms: Minimum deposit £1. Three penalty-free withdrawals per year.
Why is it ethical? While the interest rate on its instant access savings account isn’t the highest out there, Triodos – A Good With Money ‘Good Egg’ firm – 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.
* AER stands for Annual Equivalent Rate and it’s a type of interest rate for savings accounts. AER is calculated based on the interest, bonuses and charges on your savings account across a 12 month period. If your AER is variable, the amount of interest you’ll earn can change, either going up or down.
If you’d like to find out more about the above providers, a Which? membership gives you access to in-depth, expert reviews, ‘Best Buys’ and ‘Don’t Buys’ so you can buy with confidence and make quicker, more informed decisions.
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