Al Rayan Bank has raised the rate on its one-year fixed rate savings account to 5.2 percent, earning an “excellent” Moneyfactscompare rating.
Instead of paying interest to savers, Al Rayan Bank invests customers’ deposits in ethical, Sharia-compliant activities to generate a profit.
While profit rates are expected, Al Rayan Bank has said it has always paid at least the profit rate it has quoted to its customers since it was founded in 2004.
Savers need a minimum deposit of £1,000 to launch the account and up t o £85,000 can be invested overall.
Commenting on the deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Al Rayan Bank has increased the expected profit rate on its one-year fixed deposit with Raisin UK this week.
“It now takes a prominent position in the short-term fixed market, paying an expected profit rate of 5.2 percent gross.
“The deal may well appeal to savers who are willing to sacrifice access to their cash in the short term to secure a competitive return. Overall, this account receives an Excellent Moneyfacts product rating.”
Savers must be aged 18 and over to launch the account and no withdrawals can be made until the term ends.
But while Al Rayan Bank may be offering a more competitive deal, it isn’t quite topping the table.
The United Bank of India offers an Annual Equivalent Rate (AER) of 5.25 percent. Savers need a minimum deposit of £5,000 to launch the account and interest is paid on maturity. Up to £340,000 can be invested and withdrawals cannot be made until the term ends.
Following the recent Bank of England Base Rate reduction, savers are being urged to move quickly to snap up the high interest rates on offer now.
Kevin Mountford, co-founder of Raisin UK, said: “The Bank of England has reduced interest rates by a quarter percentage point to five percent. This comes after rates were held at a 16-year high of 5.25 percent since August 2023.
“Savings accounts and tracker rate mortgages should reflect these lower interest rates immediately. Fixed-rate mortgages have already factored in the likelihood of lower rates, with some reductions in the past few weeks.”
Mr Mountford continued: “Any individuals with savings or pension pots should consider locking in any market-leading rates on longer terms immediately, as this will prompt reductions across the market, leading to lower interest earnings over time.
“While [the] rate cut eases consumer pressure, it may still be some time before we see significant relief for household finances. We shouldn’t expect borrowing costs to decrease as rapidly as they increased, and we may see one more cut before the Chancellor’s Budget announcement in October. “
