Some price comparison sites aren’t showing customers some of the most competitive deals because Islamic banks are excluded, new research has found – and that’s not the only way savers may overlook the top rates.
Whether its checking providers that fall outside of comparison sites, or considering some more unusual account types, you may be able to find a better return on your cash by thinking outside the box.
Which? has looked into how to find hidden savings account deals, so you can find the best one for you.
What are the best savings account rates?
The Which? Money Compare comparison tables let you search hundreds of savings and Isa accounts to help you choose the right deal for your circumstances.
With inflation currently at 2.5%, it’s important to find the best possible rate for your cash savings.
Below, we’ve identified a few tactics for identifying deals that you might otherwise not have come across.
- Find out more: How to find the best savings account
Consider an Islamic bank
Research by Gatehouse Bank recently found that only seven out of 15 price comparison websites included Sharia-compliant accounts alongside other providers.
Yet these account are available to all UK savers and offer some of the most competitive rates around.
In some cases, these deals may be excluded because they aren’t listed with AER returns, but rather an ‘Expected Profit Rate’ (EPR).
The principle of paying or charging interest is against Islamic law, so accounts list an ‘Expected Profit Rate’ instead.
Unlike an interest rate, there is some risk that the expected rate won’t be met, as it is dependent on the profits the bank receives.
If this is the case, customers will be informed and given the option to take out their money along with the profit they’ve made so far, or they can accept a new, lower EPR.
If the bank exceeds its estimated profits, it could mean you receive a higher rate.
Before opting for an account of this type, it’s worth checking the bank’s track record for paying out. Al Rayan Bank, for example, claims its customers have always received the quoted rate of profit since its inception in 2004.
Most Islamic banks are covered by the UK Financial Services Compensation Scheme (FSCS) – though you should check any provider you plan to use – so savings up to £85,000 are covered.
The table below shows savings accounts categories where Islamic banks offer the highest rates of return.
See whether a notice account can offer better rates
If you want to be able to access your money but can plan this in advance, a notice account can be a great middle-ground between a fixed-term and instant-access account – without compromising too much on interest.
For instance, the Al Rayan Bank 90 Day Notice Account gives an EPR of 1.5%. If you decide you want to withdraw some or all of your money, all you have to do is give 90 days’ notice.
This gives much more flexibility than a fixed-rate account, and the rate is only 0.4% less than the top one-year fixed-rate bond. It also means your funds will grow more than if they’re saved in an instant-access account.
The table below shows the top rates available for a range of notice account terms.
Lock your money away for as long as possible
Fixed-term accounts tend to offer the best rates, as you’re rewarded for leaving your money in the account for a set period.
A relatively high initial deposit is also often required – most of the ones we found could only be opened if you deposited at least £1,000.
The top rate for a five-year fixed-term account comes from Vanquis bank, offering 2.7% on balances between £1,000 and £250,000.
Interest is paid monthly, and there is no option to withdraw any money before the end of the five-year term.
If you can’t commit to a full five years, there are also four-year accounts on the market, but below this period, rates tend to be significantly less attractive. Vanquis Bank’s four-year fixed-rate bond gives 2.52% AER on savings between £1,000-£250,000.
See the table below for the highest rates on four and five-year fixed-rate accounts.
Commit to regular payments
If you’re confident that you’ll have cash to save each month, the highest rates can be found when you commit to saving regularly.
First Direct’s Regular Saver Account is available to those who already hold a 1st Account current account, and offers 5% AER when you commit to saving between £25-£300 every month.
You’ll be credited with the interest after a year, meaning you could earn up to £97.50 if you deposit the maximum £3,600.
However, it’s worth bearing in mind that many of these rates are only available for a set period – often 12 months – so you’d need to switch elsewhere to continue earning a high rate.
Our table shows the regular savings accounts with the highest AERs.
- Find out more: What are the different types of savings account?
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.