With savings rates significantly higher than they have been for years, many people face the risk of paying interest on their savings.
A good way to avoid this is through a Cash ISA, which lets you earn tax-free interest on savings of up to £20,000 per tax year.
If you choose an ethical Cash ISA, your provider will not be lending your money out to businesses or industries that harm the environment. Some go even further by only lending it to those that have a positive impact on the world.
While interest rates are better than before, you’re unlikely to find a cash savings rate that won’t later be eroded by inflation. But at least your returns will remain steady rather than rising and falling in value like stock market investments. Just bear in mind that if you don’t need your cash for at least five years, you are more likely (though no guaranteed) to make higher returns by investing.
Cash ISAs also offer deposit protection from the Financial Services Compensation Scheme.
Here, we round up the six top-paying ethical cash ISA providers.
- Four Access ISA 5.05 per cent (Gross/AER/Variable)
Coventry Building Society recently became the first building society to achieve B Corp status. B Corp is a globally recognised certification for companies that meet high standards of social and environmental performance, accountability, and transparency, and are run for the benefit of all people, communities, and the planet.
Building societies are mutual organisations, which means they are owned by their customers and not shareholders.
Shareholder-owned companies tend to aim for maximum profits as quickly as possible, which can result in some dodgy decision-making, whereas building societies’ interests are the same as their customers’ interests, so good products and service are as important as profits (which go back to members anyway).
- One Year Fixed Term Woodland Cash ISA, Shariah principles – 4.85 per cent (Gross/AER/Fixed)
An Islamic Bank, Gatehouse avoids investing in industries considered to be 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.
Additionally, for every Woodland Saver account opened or renewed, Gatehouse will plant a tree in a UK woodland on the saver’s behalf.
Under Shariah principles, interest cannot be earned but profit is generated instead. The profit shared is the expected profit rate at the time the account is opened. To date, Gatehouse has always generated and paid its customers the expected profit rate. Find out more about how it works here.
Fixed Rate Cash e-ISA until 28 February 2025 – 4.60 per cent (Gross/AER/Fixed)
Yorkshire Building Society is an official signatory of the UN Principles for Responsible Banking – a single framework for a sustainable banking industry.
The mutual has made a commitment to identify and measure the environmental and social impacts of its business activities, set and implement targets where it has the most impact, and regularly report publicly on its progress.
4. Triodos Bank
- Fixed rate ISA for two years – 4.50 per cent (AER/Fixed)
Triodos uses the money its savers deposit with it to lend out to real economy businesses making a positive environmental, social or cultural impact on the world. Also offering stock market investments, crowd-funded Innovative Finance ISAs (IFISAs) and ethical current and savings accounts, Triodos is a true leader in the field of ethical personal finance.
- 1 Year Triple Access Online ISA – 4.25 per cent (Gross/AER/Fixed)
Nationwide is the UK’s largest mutual, meaning it’s owned by and run for the benefit of its members. Because of the way it’s run, it’s free to reinvest more profits into products and services that benefit members, rather than being driven by shareholders. It says doing the right thing by its members is at the heart of what it does.
With the Triple Access ISA, you can make three penalty-free withdrawals per tax year. After this, the interest rate reduces to 2.15 per cent.
- Ecology Cash ISA – 4 per cent (AER/Variable)
Ecology Building Society uses its savers’ deposits to lend out as eco-friendly mortgages for new-builds and renovation projects with the ultimate aim of helping make Britain’s housing stock more energy efficient.
Ecology also has a Good Egg mark from Good With Money.