Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 07/10/2019

Savers may not be getting a decent return on their flexible nest egg with the big high street banks, but they could do better by investing with an ethical alternative according to the latest research by Moneyfacts.co.uk.

Good Money Week – which is designed to raise awareness of sustainable, responsible and ethical finance – runs until 11 October, and our data shows that most ethical brands offer higher returns than high street banks on easy access accounts. There are also ethical brands paying decent returns on notice accounts.

For instance, Gatehouse Bank currently pays a highly competitive 1.40% as an expected profit rate on its easy access account, so savers may want to review where they are currently saving their cash and consider switching to not just to hunt down a better rate, but to move to a more ethical brand. Savers may want to act quickly, as Al Rayan Bank recently replaced its lucrative 1.60% with a new issue that pays an expected profit rate of 1.00%. In comparison, the highest new customer rate for an easy access account from a big bank pays just 0.40%*.

Easy access accounts from ethical brands

Provider

Product

Gross rate at £10,000

Ethical stance

Gatehouse Bank

Easy Access Account

1.40%**

Islamic Bank – ethical principles

Al Rayan Bank

Everyday Saver (Issue 2)

1.00%**

Islamic Bank – ethical principles

Ecology BS

Easy Access

0.85%

Ethical principles

Triodos Bank

Online Saver Plus

0.80%

Ethical principles

The Co-operative Bank

Online Saver

0.75%

Customer-led ethical policy

The Co-operative Bank

Smart Saver

0.46%

Customer-led ethical policy

Triodos Bank

Online Saver

0.30%

Ethical principles

**Islamic bank, pays an expected profit rate. The Online Saver from Co-operative Bank is available to current account customers that do not require regular funding. Source: Moneyfacts.co.uk

 

Notice accounts from ethical brands

Provider

Product

Gross rate at £10,000

Ethical stance

Gatehouse Bank

120 Day Notice Account

1.82%**

Islamic Bank – ethical principles

Gatehouse Bank

95 Day Notice Account

1.75%**

Islamic Bank – ethical principles

Bank of London and The Middle East

90 Day Notice Account (Issue 1)

1.70%**

Islamic Bank – ethical principles

Al Rayan Bank

90 Day Notice Account

1.50%**

Islamic Bank – ethical principles

Ecology BS

90 Day Notice

1.35%

Customer-led ethical policy

Al Rayan Bank

60 Day Notice Account

1.00%**

Islamic Bank – ethical principles

Charity Bank

Ethical 93-Day Notice Account

0.50%

Ethical principles

Charity Bank

Ethical 33-Day Notice Account

0.40%

Ethical principles

Triodos Bank

Saver (1 Year Notice)

0.15%

Ethical principles

Triodos Bank

Saver (90 Day Notice)

0.15%

Ethical principles

Triodos Bank

Saver (33 Day Notice)

0.15%

Ethical principles

**Islamic bank, pays an expected profit rate. Source: Moneyfacts.co.uk

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“The urge to invest more ethically could come to mind if savers are getting little return for their loyalty from a big high street bank, which consequently leads them to seek an alternative. Thankfully, there are ethical brands out there to consider, and in fact the leading ethical easy access deal is currently offered by an Islamic bank.

“Investing ethically can be as simple as switching to a brand that has ethical principles, where savers can feel like they are making a difference but are also given a fair return on their hard-earned cash. Big banks just don’t need savers’ cash, so it’s not surprising to find that they are paying abysmal rates. HSBC pays just 0.15% on its Flexible Saver, but Gatehouse Bank pays 1.40% as an expected profit rate on its Easy Access Account. Even the highest new customer rate from a big bank is just 0.40% from Santander on its eSaver (Issue 15).

“While Islamic banks don’t pay interest, they do pay an expected profit rate, and this can be comparable to other savings accounts. Where an Islamic bank is covered by the Financial Services Compensation Scheme and regulated by the Financial Conduct Authority, savers can be safe in the knowledge that they have the same level of protection as with any other provider under the same scheme. Islamic banks also offer decent returns on notice accounts too, where savers can get a little more than on an easy access deal.

“During a period of economic uncertainty, savers may well be rethinking how they invest and want to know whether they are banking with a brand that is giving back to the community. Ecology Building Society for example gives back via community projects and lent £38.4 million in 2018 to support 255 sustainable properties and projects. Its Easy Access account may pay less than 1%, but it still beats the rates offered to new customers from the biggest high street banks*.

“Savers intrigued by the principles of ethical finance would be wise to consider the more unfamiliar brands, whether for a standard savings account or their day-to-day banking, there are a variety of options available on the market.”

*Big bank easy access selection based on £10,000 gross: Bank of Scotland Access Saver 0.20%, Barclays Bank Everyday Saver 0.25%, Halifax Everyday Saver 0.20%, HSBC Flexible Saver 0.15%, Lloyds Bank Easy Saver 0.20%, NatWest/RBS Instant Saver Account 0.20%, Santander eSaver (Issue 15) 0.40% and TSB Easy Saver 0.35%.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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