As we all know, rates across the board have been falling heavily over the last couple of months and indeed, over just the last two weeks since our last newsletter, the best one year fixed rate bond available has dropped from 1.40% to 1.21% AER.
But fixed RATE bonds are not the only option. There are also Sharia-compliant Fixed Term accounts which are similar and are now dominating the best buy tables.
Sharia fixed term accounts are different to standard fixed rate bonds as they pay an Expected Profit Rate (EPR) rather than a fixed interest rate, in order to comply with the strict ethical code of Sharia banking principles. This means that the rate is not guaranteed, although it’s worth noting that to date, the offered EPRs have always been paid on the fixed term accounts, as they are provided with that objective in mind.
For more information on how Sharia accounts work, take a look at our previous article.
For those happy to open a Sharia fixed term account, BLME are currently paying the best rate over 12 months at 1.25% AER.
Over two years, Al Rayan Bank is paying 1.40% while Gatehouse and BLME are paying 1.35%. Over three years Al Rayan Bank and BLME are paying 1.50% with Gatehouse following closely at 1.45%.
Even over the five year term, BLME is in top place , offering 1.60%.
But it’s not just the fixed term account sector that Sharia accounts are leading. The best easy access cash ISA is with Al Rayan Bank, paying 1.10% and the best one and two year ISAs are also offered by Al Rayan, paying 1.20% AER and 1.40% AER respectively.
And BLME pays the best rate on a 90 day notice account – currently 1.10% AER, beaten only by Shawbrook Bank’s 120 Day Notice account which is paying 1.20% AER.
Sharia-compliant providers have been a firm, and much more visible part of the savings landscape for a number of years now, so now could be the time to give them a go in order to earn the best rates.
At the end of the day, the most important thing to remember is that all the providers mentioned above are all fully authorised and regulated in the same way as other banks and building societies and are part of the UK Financial Services Compensation Scheme (FSCS). So, funds of up to £85,000 per person, per bank, are protected in the same way as funds deposited with your high street bank.