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What are Sharia-compliant investments?

Al Rayan Bank offers new table-topping deals
Gold piggy bank with piles of coins

Al Rayan Bank has climbed to the top of the Which? Money Compare two-year and three-year fixed-rate savings tables, with bonds paying 2.42% AER and 2.73% AER respectively. 

However, you’ll need to bear in mind that in compliance with Sharia law, its accounts pay a profit equivalent to the rate of the account and not traditional interest.

What are Sharia-compliant investments?

Accounts which are compliant by Sharia law don’t offer ‘interest’, as this is against Islamic principals. 

Instead, the provider aims to pay the rate offered as an ‘expected profit rate’. 

Any profit earned is taxed in the same way as traditional interest. The key difference is that the ‘expected profit rate’ is not guaranteed. 

Which? Money Compare table: For more information, see Al Rayan Bank’s two-year fixed-term deposit account and its three-year fixed-term deposit account.

Are Sharia-compliant investments a safe option?

Al Rayan Bank has reportedly always achieved the expected profit rate quoted to customers since the bank was established in 2004. On occasions, the bank has even paid out more. 

However, returns can’t be guaranteed and you could end up receiving less profit than you expected.

If you prefer to receive traditional interest, the best two-year fixed rate account in our tables is from Aldermore Bank, paying 2.35% AER from initial deposits of £1,000. 

The best three-year option in our savings tables is from United Trust Bank, which currently offers 2.60% AER. 

The Which? Money Compare tables let you search hundreds of savings accounts and cash Isa deals from providers large and small so that you can find a good home for your nest egg. We also combine this with our unique customer scores that show you how well the providers featured are likely to treat you in the long run.

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