Yahoo Finance The little-known banks offering up to 4.9pc on your savings
With inflation so high, it has rarely been so important to make sure that you are getting a good deal on your savings. But big name high street banks rarely feature on “best buy” lists anymore – instead, it is smaller or younger banks that are offering the best returns on your cash.
It can be daunting handing over your life savings to an unfamiliar bank – but these are the businesses offering the best deals and ignoring them can mean that you miss out on hundreds if not thousands of pounds in interest. They are also members of the Financial Services Compensation Scheme, meaning the first £85,000 of your savings is protected in case the bank goes bust.
The Telegraph takes a closer look at some of the new and smaller names beating the high street banks on their best deals.
Melton Building Society
Best rate: 4.9pc fixed four-year bond
Easy-access Isa rate: 1.05pc
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This is a relatively small bank based in Leicestershire, with just 40,000 members, but it is currently offering one of the best fixed rates on the market, according to the analyst Moneyfacts. Melton is offering its savers a 4.9pc rate on a four-year bond. Interest is paid annually in March on a minimum deposit of £10,000 – which would turn into around £12,864 by the end of the term. The maximum deposit size is £500,000.
However, in order to open an account you must visit one its three local branches in Melton, Grantham or Oakham.
The bank also offers online savings accounts, with other competitive fixed rates and easy access Isas. Applications for these do not require visiting branches in person.
Zopa
Trustpilot rating: 4.5 out of 5 stars
Best rate: 4.75pc fixed four-year bond
Easy-access standard account rate: 2.4pc
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Zopa is a British start-up financial services company that started 16 years ago. In 2005 it built a peer-to-peer lending company, and in 2020 it launched Zopa Bank which is the branch of the business that provides savings accounts.
After Melton, Zopa offers one of the most competitive rates for a two-year or a four-year bond, at 4.65pc and 4.75pc respectively.
The company had around half a million customers as of the end of 2021, although it still made a pre-tax loss of £34m. It recorded £968m in deposits by customers, but it is growing fast and is offering competitive rates to attract new business.
Prospective new joiners should note that Zopa does not offer Isas, only standard saving accounts. It is a digital bank, which means that if you want to open a fixed-term savings or easy access account, then you will have to apply online either through its website or mobile app.
Al Rayan
Trustpilot rating: 2.4 out of 5 stars
Best rate: 2.85pc, fixed 36 months
Easy-access Isa rate: 1pc with minimum deposit of £50
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For many savers, Al-Rayan may be among the least familiar names that regularly appear on “best buy” saving lists. This is a bank that operates in keeping with the ethical values of Islam, and offers services to over 9,000 accounts in the UK.
Central to Islamic finance is the idea that money itself has no intrinsic value, which means that you cannot lend money or receive money from someone and expect to benefit.
Al Rayan generates a return on savings by investing in stable real assets, such as property or metals. It will never invest in industries connected with gambling, alcohol, tobacco, arms or pornography. It will also never invest money in a derivative or bond.
Its accounts therefore do not offer an interest rate, but rather an “expected profit rate”.
Shawbrook Bank
Trustpilot rating: 4.6 out of 5 stars
Best rate: 4.6pc two-year bond
Easy-access Isa rate: 1.5pc
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Shawbrook currently offers the best deal for a one-year fixed bond, according to Moneyfacts, at 4.55pc. The highest rate on offer at the bank is 4.6pc for its two-year bond. For both, the minimum deposit is £1,000, with a maximum balance of £2m.
Shawbrook is also a relatively small bank, with around 350,000 customers. It made £197m in pre-tax profits in 2021, and looked after around £8.4bn in deposits.
Earl Shilton Building Society
Best rate: 2.65pc
Easy-access Isa rate: 2.55pc
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Earl Shilton is another building society which can trace its history back over 100 years. It offers one of the most competitive cash Isa rates, at 2.65pc and 2.55pc. The higher paying account comes with a 90 days notice period, whereas the 2.55pc Isa offers instant access.
The bank is based in Leicestershire, and was run by a local family for several decades up to the 1990s. It has assets of over £149m and has around 14,000 members.
Virgin Money
Trustpilot rating: 1.2
Best rate: 4.11pc two-year fixed rate bond and two-year fixed rate cash e-Isa
Isa rate: 3pc
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Virgin Money is currently offering the best cash Isa rate available of 3pc, according to Moneyfacts. It calls itself a digital bank, although it does have a few physical branches dotted up and down the country.
The bank is part of the Virgin Group, founded by Sir Richard Branson. This branch of the business also includes Clydesdale Bank, as well as Yorkshire Bank.
