If you want a decent return on your money, then you need to look beyond the high street to less familiar names.
If you check out the savings best buy tables you’ll spot some unfamiliar names. Companies such as RCI Bank, Milestone Savings and Fidor are proving serious competition for high street banks and building societies.
But who are these new providers. And can you trust them with your cash?
RCI’s Freedom Savings Account tops the easy access table at a rate of 1.65%. Unlike many other savings accounts there aren’t any hidden catches such as an introductory bonus or limits on withdrawals.
It’s a decent account – I opened one last year.
RCI Bank is French and part of the Renault car group, one of the world’s largest car companies. RCI Banque has been operating in mainland Europe since 1974, with the UK branch, RCI Bank, opening last year.
UK savings with RCI are protected under the European Economic Area (EEA) passport scheme. This means that in the unlikely event of RCI going bust, savers would rely on the French deposit protection scheme which protects the first €100,000 of savings per person.
As well as a table-topping easy access account, RCI also offers a one-year fixed bond at 2.06%, a two-year bond at 2.35% and a three-year fixed rate at 2.7%, all very competitive rates.
Milestone Savings is part of Gatehouse Bank, an investment bank based in London. It launched last year and is now offering a one-year fixed rate bond at 2.1%, a three-year bond at 2.65%, and a five-year fixed rate at 3.2%.
However, the savings rates are not set in stone. Milestone is a Shariah-compliant provider which means it doesn't technically offer interest but states an “expected profit” instead. Its website says it will contact savers if the expected profit cannot be achieved and savers can withdraw their cash before maturity if the rate doesn’t live up to expectations.
The other thing to note is that Milestone’s fixed term accounts require a hefty £10,000 minimum deposit.
Money with Milestone Savings is protected by the Financial Services Compensation Scheme (FSCS) which protects up to £75,000 per person per banking licence.
Al Rayan Bank
Another Shariah compliant provider offering competitive rates is Al Rayan Bank, formerly known as the Islamic Bank of Britain.
It’s offering a one-year fixed rate at 2.17%, two years at 2.78%, and three years at 2.88%. But, as with Milestone Savings, these returns are “expected profit” rather than guaranteed rates.
Al Rayan Bank also offers a number of notice accounts, children’s accounts and cash ISAs. Money that you save with Al Rayan Bank is protected under the FSCS.
Fidor Bank currently offers a one-year bond paying 2%, an 18-month bond paying 2.1%, a two-year bond at 2.4% and a three-year fixed rate at 2.75%.
The German bank launched in the UK in September 2015 and you need a Fidor Smart Current Account in order to open a savings account.
UK savings with Fidor are protected under the European Economic Area (EEA) passport scheme which means savers would be reliant on the German deposit protection scheme if Fidor were to cease trading.
Ikano Bank started offering savings products to UK savers in December 2015. It’s currently offering just one product: a three-year bond at 2.55%, just below the best rates on offer.
Ikano was founded by the same family behind furniture chain Ikea and has been operating in the UK since 1994 offering loans and sales finance.
Deposits with Ikano Bank are protected under the Swedish equivalent of the FSCS, the Swedish Deposit Insurance Scheme, up to the value of €100,000.
United Bank (UBL)
United Bank of UBL is another Islamic Bank. It was formed in 2001 from the merger of the UK branches of two Pakistani banks, United Bank Limited and National Bank of Pakistan, who had been operating in the UK since the mid-1960s.
UBL is offering a two-year bond at 2.15%, three years at 2.5%, five years at 3.04% and seven years at 3.12%, all of which are either market leading or close to it. The accounts have a £2,000 minimum investment and, as UBL has a UK banking licence, deposits are covered by the FSCS.
You're losing money with a high street bank
A quick look at our huge savings guide Where to earn most interest on your cash makes clear just how important it is to look beyond the mainstream names if you want to get a decent return on your savings. If you stick with a high street bank or building society you will lose out.
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