Can You Save Money And The Environment?
If you want to apply principles to your pennies and pounds, there are a growing number of ethical savings accounts to choose from.
More and more of us are taking a more "ethical" and "organic" approach to our lives, by cycling to work, recycling our rubbish, and buying Fairtrade coffee.
And for those of us who want to apply our principles to our pennies and pounds, there are now a growing number of ethical savings accounts to choose from.
These accounts are conventional in every way, except with the crucial difference that the providers are completely transparent about where they are lending. The main names in eco-conscious money management are The Co-operative Bank, Triodos Bank and Ecology Building Society.
But while the idea of making your money work ethically all sounds very worthy, how do the rates stack up?
Triodos is a small Dutch ethical bank that lends money to -- or invests -- in businesses and charities that directly benefit people and the environment. It currently offers an ethical cash ISA that pays 4.35% on a minimum of £10.
Elsewhere, the Ecology building society, which specialises in lending money to socially responsible housing projects, has a small ethical savings arm, and its Earthwise cash ISA is currently paying 4.1 per cent on a minimum investment of £25.
While these rates are not particularly competitive, you can get a slightly higher rate with The Co-operative Bank which currently pays a rate of 4.75% on its cash ISA. The Co-Op operates an ethical policy based on the concerns of its customers, and will not lend to companies engaged in the abuse of human rights, the arms trade, animal cruelty, or tobacco.
However, these rates are significantly lower than those on offer from mainstream providers where the 'best buy' accounts currently on offer include Icesave, paying 6.1 per cent on its easy access ISA on a minimum of £1,000, and Egg, paying 6.05 per cent on a minimum of £1.
NOTICE AND NO NOTICE ACCOUNTS
Triodos also offers a range of charity savings accounts -- both notice and no notice -- which make donations on the saver's behalf to organisations such as Amnesty, FairTrade and the Medical Foundation. Savers can also opt to donate some or all of their interest to their charity of choice.
The FairTrade saver account is a 33-day notice account paying 2.35 per cent on a minimum of £100 -- there are then higher rates on offer from accounts with longer notice periods and which require bigger deposits.
Once again it's the Co-op which is offering one of the higher rates: it's currently paying 4.18 per cent on its Smart Saver, which can be opened with as little as £1, while Smile, its online offshoot, is paying 4.25 per cent on a minimum of £1 on its instant access account. However, you do need to be a Smile current account holder to qualify for that rate.
That said, all of these rates are fairly uncompetitive compared to their mainstream counterparts, where rates range up to 6.51 per cent on the instant access Internet Saver Issue 3 account from Bradford & Bingley.
FIXED RATE SAVINGS BONDS
In the fixed-rate savings bond market, Triodos is paying 4.5 per cent on its Renewable Energy Bond, a two-year bond which requires a minimum deposit of £2,500.
But this rate can easily be trounced by a host of mainstream offerings which are now paying more than 7 per cent; Birmingham Midshires, for example, is currently paying 7.11 per cent on its one-year bond.
With rates on these ethical accounts mediocre to say the least, you won't see your money grow very quickly if you "go green" with you cash.
But, on the plus side, you can bask in the warm glow of knowing that your money is going to fund worthwhile enterprises. What's more, these accounts tend to offer consistent rates and are usually simple, without restrictions or bonuses -- and there is a wide range from each provider.