UK interest rates have been falling in 2024 after a year sat at the 16-year high of 5.25 per cent. Inflation is still proving tricky though, which makes it difficult to predict whether the Bank of England base interest (which affects your savings rate) will stick at 4.75 per cent or keep going down.
If you’re prepared to lock your savings away for a set term (and won’t need to access your money during that time), you could make a higher return on a fixed rate account over time than with an instant access one.
Here are our picks for the highest-paying ethical fixed-rate savings accounts:
1. Raisin
If you have a substantial sum in savings, Raisin is offering Good With Money readers a FREE £100 cashback offer. Use the code ‘SAVINGS100’ until December 16, 2024 – you must fund your first savings account with £10,000 before December 31, 2024. Use this link to claim yours.
Raisin UK is a ‘savings platform,’ which works with a selected number of banks and building societies to help source savings accounts for you.
- One year fixed term deposit account with Al Rayan – the world’s oldest Sharia-compliant bank – offering 4.80 per cent/AER/Gross
Why is it ethical?
Raisin UK enables you to compare savings rates from ‘ethical’ banks. It offers savings deals with building societies, which are by nature more ethical than banks, Sharia-compliant accounts (such as Gatehouse and QIB UK) as well as Tandem (see below), which says it is aiming to be a ‘Good Green Bank’.
2. Tandem Bank
- Fixed Saver Account (choose from one to three-year terms) – 4.65 per cent interest gross/AER on one year term
Why is it ethical?
Digital challenger bank Tandem aims to be a “greener, more accessible bank for people across the UK”. It guarantees that your savings are never used to fund fossil fuel extraction and production or similar destructive industries. Instead, money held in its savings accounts is used solely to fund its lending products.
Tandem’s 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.
Your savings are covered up to a total of £85,000 by the FSCS.
Key terms: Minimum deposit is £1,000. No access to your money during the account term, after the 14-day ‘cooling off’ period.
Find out more about Tandem Bank in our full review
3. Shoal
New sustainable savings app Shoal is set to launch in the new year – you can join the waiting list here. As at 11 December 2024 the rates Shoal is offering are:
- 3 months Savings Pot at 4.65 per cent
- 6 months Savings Pot at 4.55 per cent
- 12 months Savings Pot at 4.45 per cent
Why is it ethical?
Once you create a Savings Pot, your money is referenced against Standard Chartered Bank’s Sustainable Finance portfolio. This portfolio is made up of loans and other financial products provided to companies or projects supporting sustainable development around the world. Almost all (90 per cent) of these projects are located in Asia, Middle East and Africa where the need for private financing is greatest, and therefore also where the impact is greatest.
Projects your savings will help support include the construction of hospitals, extending electrified rail networks, creating energy efficient buildings and rolling out renewable energy projects such as offshore wind farms and solar power plants. Some projects generate and distribute clean water where it is needed the most.
You can track your personal contribution to C02 savings and the clean water you help generate with your savings while growing your wealth.
Shoal says that with just £100 you’ll not only earn a competitive rate on your savings, you’ll also help to support the avoidance of around 21 kg of CO2 and provide access to around 90 litres of clean water.
Key terms: Minimum deposit is just £1. Shoal accounts are provided by Algbra Group Limited. Your money is protected by the FCA Safeguarding regime and by the Financial Services Compensation Scheme (FSCS).
4. Gatehouse Bank
- One Year Woodland Saver at 4.50 per cent expected profit
- Three Year Woodland Saver at 4.35 per cent expected profit
Why is it ethical?
As an Islamic Bank, Gatehouse does not invest in industries considered unethical under Shariah principles, which in practice are the same as those frowned upon under Christianity. On its website, it says “Gatehouse Bank 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. With the Woodland Saver accounts, Gatehouse plants trees (including oak, hazel and birch) on behalf of its customers.
Key terms: Minimum deposit is £500. No early access to your savings is allowed.
What does “expected profit” mean?
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.
Top 6 ethical current accounts
5. Charity Bank
- Ethical One Year Fixed Rate Account – 4.26 per cent interest gross/AER
Why is it ethical?
With Charity Bank, your savings help to create lasting social change in UK communities. 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.
Your savings are covered up to a total of £85,000 by the FSCS.
Key terms: There is a minimum deposit of £5,000 and maximum of £500,000. No deposits or early withdrawals are allowed after the first 14 days.
6. Nationwide
- One year Fixed Rate Online Bond – 4.10 per cent interest gross/AER
Why is it ethical?
Building societies such as Nationwide must hold at least 75 per cent of its assets in residential property. This makes 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.
Your savings are covered up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS).
Key terms: You can open the account with a minimum of £1 up to a maximum of £5 million. No early access to your money is allowed after the first 14 days.
Best ethical children’s savings accounts
7. Triodos Bank
- Triodos One Year Ethical Savings Bond – 4.00 per cent interest gross/AER
- Triodos Two Year Ethical Savings Bond – 3.75 per cent interest gross/AER
Why is it ethical?
Triodos, a Good With Money ‘Good Egg’ firm, will only lend its savers’ money to organisations making a positive impact on social, cultural or environmental issues. You can see the impact you’re making as Triodos publishes details on its website of every project it finances and every organisation it lends to.
Your savings are covered up to a total of £85,000 by the FSCS.
Key terms: The minimum opening deposit is £500. No early closure or withdrawals are allowed after the first 14 days.
Find out why Triodos Bank is a Good Egg
8. Coventry Building Society
- Fixed Bond (352) until 31/12/2026 – 3.90 per cent interest gross/AER
Why is it ethical?
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.
By adopting the principles of B Corp, Coventry says it has a framework that supports its ongoing effort to “make positive changes today and invest in a better future for all”. B Corps balance purpose with profit, and consider the impact of their decisions on employees, customers, suppliers, society, and the environment.
Also, crucially, building societies are owned by their customers and not shareholders.
This means they behave differently – better. Shareholder-owned companies tend to aim for maximum profits as quickly as possible, which can result in some less-than-ethical decision-making, whereas building societies’ interests are the same as their customers’ interests. Therefore, good products and service are as important as profits (and these go back to members anyway).
Your savings are covered up to a total of £85,000 by the FSCS.
Key terms: Deposit £1 to £250,000. No early access to savings allowed after first 14 days. The term ends on 31st December, 2026.
