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New instant-access savings account beats Marcus with 1.6% rate

Find out which savings accounts offer the best rates

New instant-access savings account beats Marcus with 1.6% rate

Al-Rayan Bank has launched new easy-access savings account paying an expected profit rate of 1.6%, making it a new market-leader.

The news comes after Goldman Sachs cut the rate of its once table-topping savings account, Marcus, for new customers.

When Marcus launched a year ago, it offered an initial interest rate of 1.5%, making it the highest easy access rate for two-and-a-half years. At the time, this was a welcome surprise for savers, with 50,000 customers flocking to open an account in the first two weeks of opening.

New joiners are now being offered a more modest 1.45% for their first year or savings, which falls to 1.35% thereafter.

Here we look at what the Al-Rayan account has to offer and other savings accounts that currently pay more interest than Marcus.

What does the Al-Rayan Everyday Saver offer?

Al-Rayan Bank has shot to the top of the instant-access savings table with the launch of its new ‘Everyday Saver’ account, which pays an impressive 1.6% EPR.

Customers will need a minimum deposit of £500 and can save a maximum of £1m into the account.

The account can be opened online, by phone, in branch or via the mobile app.

There are no restrictions on the number of withdrawals you can make from the account and the expected profit is paid monthly.

Al-Rayan is a Sharia-compliant bank, which means that it offers an EPR rather than an annual equivalent rate (AER) of interest on savings. As such, the bank may pay out a lesser amount of interest if its profits fall short, though to our knowledge, this has not yet happened with Al-Rayan.

How does the Al-Rayan Everyday Saver compare?

The rate of return on the Al-Rayan ‘Everyday Saver’ surpasses the next best savings rate of 1.45% offered by both Marcus and Cynergy Bank.

However, you can open these other savings accounts with just £1, whereas you’ll need £500 to open the Al-Rayan account.

The table below shows how the new Al-Rayan Everyday Saver compares to the other instant-access savings accounts on the market.

Account Rate of return Min deposit
Al-Rayan Bank 1.6% EPR £500
Marcus Bank 1.45%* AER £1
Cynergy Bank 1.45%* AER £1
Virgin Money Double Take E-Saver Issue 11 1.43% AER £1
Virgin Money Man Utd Double Take E-Saver Issue 6 1.43% AER £1

*reverts to 1.35% after the first year **reverts to 0.75% after the first year  Source: Which? Money Compare. Rates correct as of 13 September 2019, but are subject to change.

Unlocking better returns on your savings

Savings account interest rates have been notoriously lacklustre, but it might be possible to earn more by opting for the right type of account.

One-year fixed-rate savings accounts

One-year fixed-rate savings accounts offer savers the chance to access better rates, though you’ll need to lock your money away.

The table below shows the top five fixed-rate accounts available right now. 

Account Rate of return Minimum initial deposit
Bank of London & The Middle East one-year fixed-rate savings account 2.1% EPR £1,000
Al Rayan Bank one-year fixed-rate savings account 2.07% EPR £1,000
First Save one-year fixed-rate savings account 1.95% AER £5,000
Gatehouse Bank one-year fixed-rate savings account 1.95% EPR £1,000
Metro Bank fixed-term savings 1 year 1.85% AER £500

Source: Which? Money Compare Rates correct as of 13 September 2019, but are subject to change.

As a general rule, the longer the term on your account, the more you’ll earn, so you could consider a longer fixed-term account. Just keep in mind you may not be able to withdraw the money at all, or may face a penalty.

Regular savings accounts

Regular savings accounts can offer another alternative, especially if you have a lower initial deposit.

You’ll need to save a certain amount each month. Depositing less or withdrawing any money could mean that you lose out on the interest you’ve earned.

Take the First Direct Regular Saver, for example. This account offers savers 5% AER who make monthly deposits of between £25 and £300. If you withdraw any money during the 12-month period, your interest rate will drop from 5% to just 0.15%.

The accounts often also have a maximum monthly savings amount – for First Direct, it’s £300, so won’t suit savers with a large sum to stash away.

Be sure to read the terms and conditions of an account carefully before committing to one.

The table below shows a round-up of the best regular saver rates available.

Account Rate of return Min deposit Monthly savings
First Direct Regular Saver 5% AER £25 £25-£300
M&S Monthly Saver 5% AER £25 £25-£250
HSBC Regular Saver (preferential rate) 5% AER £25 £25-£250

Source: Which? Money Compare Rates correct as of 13 September 2019, but are subject to change.

How to find the best savings account 

Finding the right type of savings account will depend on your financial circumstances.

While fixed-rate savings accounts pay higher interest, they are more restrictive.

So if you think you’ll need to dip into your savings for an emergency, it might be best to consider accounts that pay lower rates of interest but offer better flexibility when accessing your money.

For more help and tips check out our guide on finding the best savings account where we reveal the best and worst savings account providers.

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? Money Compare is a trading name of Which? Financial Services Limited.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms & conditions of a provider before committing to any financial products.

Categories: Money, Savings & Isas

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