Green savings accounts: How do the rates compare?

While there are only a few market-leading green savings accounts, most of the offers better the respective averages.  

Not everyone chooses a savings account solely on rate. Some wish to receive their interest monthly while others want to enjoy frequent access to their cash.

Then there are the softer aspects some prefer to consider, like where their money is invested. While your savings in a traditional bank or building society are generally used to fund its lending, what if this could be exclusively available for eco-friendly products?

Given the UK’s pledge to cut its greenhouse-gas emissions to net zero by 2050, there are now several providers which market “green savings accounts”. These deals usually earmark your savings for projects like greener transportation, or simply form part of the provider’s environmentally focused ethos.

Even though this might incentivise your savings choices, are “green” savings accounts competitive?

Below we’ve listed some of the green savings accounts and how they compare to other deals in this sector.

In 2021 the Government-backed National Savings and Investments (NS&I) launched its three year fixed Green Savings Bond.

Money deposited with the NS&I is used for public spending, like building roads and maintaining hospitals. But its Green Savings Bond differs from its other accounts in that it will fund Government-led green projects.

These include funding solar and wind power, carbon capture and storage, or forest planting and conservation, among other uses.

It currently offers a rate of 4.20% AER, which is some way off the best rate in the sector at 4.68% AER.

The NS&I’s bond is also bettered by Paragon Bank’s three year fixed green savings account, which offers a rate of 4.35% AER. If you opt to save with this provider then your savings will be used to support Paragon Bank’s green lending products, like buy-to-let mortgages for energy efficient homes. 

Both accounts remain above the average for the sector, which sat at 4.01% AER at the beginning of April.

If you’re in the market for a different fixed rate bond there are other providers to consider.

For example, you could opt for one of Gatehouse Bank’s Woodland Saver accounts. These can also form part of your ISA allowance and operate slightly differently to the NS&I’s Green Savings Bond.

Instead of funding green initiatives, Gatehouse Bank will plant a tree in a certified UK woodland for each account you open or renew.

The entire Woodland Saver range betters its respective Moneyfacts average rate for April and, in some instances, are some of the best deals on the market.

So, to find out how they compare in more detail visit our charts.  

As an alternative to this selection, Triodos Bank offers a one and two year fixed rate, while the State Bank of India offers a green three and five year fixed deal.

The State Bank of India’s accounts exceed its respective average returns for April, while Triodos Bank, which just has a green ethos, offers less than these average rates.

If you’re in the market for a variable account instead, then you could consider a notice account from RCI Bank UK.

Fresh off an increase to its 14 day notice account today, this deal now offers the top rate for accounts requiring a notice period of 30 days or less.

“Deposits on our green E-Volve Saver account [are] used exclusively to fund loans that have helped people buy or hire electric vehicles,” said Tafari Smith, Head of Savings at RCI Bank.

“This has helped motorists avoid emitting more than 6.4 million kg of CO2 in 2022 when driving. Achieving that level of CO2 reduction would require the planting of 256,469 mature trees.”

Otherwise, for an easy access account, Tandem Bank offers an Instant Access Saver at 3.15% AER.

It pays its interest monthly, for those who prefer their interest to supplement their regular income, and it can only be operated via mobile app.

Like Triodos Bank, Tandem Bank has a green ethos and, by opening its Instant Access Saver, you’ll be supporting its eco-friendly initiatives. These include making home improvements which make UK homes more environmentally friendly.

Better-paying easy access accounts do exist, but Tandem Bank’s interest beats the typical return in this sector.