While an interest rate battle has been raging between standard savings providers, some Sharia accounts have quietly dominated the top spots, offering good value for those in the know.
Some of the very best rates on the market can be found amongst Sharia accounts and while there are key differences to be aware of, to dismiss them out of hand could mean that savers miss out on precious returns.
While fixed term deposits and notice accounts are the most common and competitive type of Sharia compliant accounts currently available, there are also easy access accounts and both variable rate and fixed term cash ISAs available.
Sharia accounts work broadly in the same way as the standard equivalents, although each pays an expected profit rate rather than interest, and this profit rate is not guaranteed.
This is why we have a separate Best Buy Table for Sharia accounts – so don’t forget to keep an eye on this as well as the others, or call us to speak to one of our savings experts.
While the return on the fixed term products is not guaranteed in the same way that the rate is on a standard fixed rate bond, Sharia providers are keen to state that expected profit rates are usually achieved – and that has been our experience.
And most providers allow you to take funds away early if the expected profit rate is not likely to be met.
It is also worth noting that the risk involved is to the level of return only; the capital is no more at risk than in a standard savings account, provided of course you keep within the Financial Services Compensation Scheme (FSCS) limit of £85,000 per person, per provider.
Read our article Savings Focus: Sharia Compliant Savings for more information of how these accounts differ from standard savings accounts.
Sharia compliant accounts v the rest of the market
5-year fixed term account
Bank of London & The Middle East (BLME) 2.50% gross/AER v Ikano Bank 2.46% gross/AER or Paragon Bank 2.45% gross/AER
3-year fixed term account
BLME 2.25% gross/AER v Ikano Bank 2.21% gross/AER or Paragon Bank 2.20% gross/AER
2-year fixed term account
BLME 2.10% gross/AER v Axis Bank 2.05% gross/AER
1-year fixed term account
BLME 2.00% gross/AER v The Access Bank 1.85% gross/AER
Milestone Savings (95 Day Notice) 1.52% gross/AER v Paragon Bank (120 Day Notice) 1.45% gross/AER or Wyelands Bank (95 Day Notice) 1.40% gross/AER
If you would like to discuss Sharia compliant accounts in more detail or have any savings related query that you would like to run past us, call us free on 0800 011 9705, we’d love to hear from you.