by With inflation so high, making sure you’re getting a good deal on your savings has rarely been more important. But big-name high street banks are rarely on “best buy” lists anymore—instead, it’s smaller or younger banks that offer the best bang for your cash.
It can be intimidating to hand over your life savings to an unfamiliar bank – but these are the businesses that offer the best deals, and ignoring them could mean missing out on hundreds or even thousands of pounds in interest. They are also members of the Financial Services Compensation Scheme, meaning the first £85,000 of your savings is protected in case the bank goes bankrupt.
The Telegraph takes a closer look at some of the newer and smaller names that are outperforming high street banks on their best deals.
Melton Building Society
Best rate: 4.9 fixed four-year bonds
Easy access Jesus rate: 1.05 pcs
FSCS protected: Yes
It’s a relatively small bank based in Leicestershire, with only 40,000 members, but it currently offers one of the best flat rates on the market, according to analyst Moneyfacts. Melton offers savers a 4.9 percent rate on four-year bonds. Interest is paid on a minimum deposit of £10,000 in March – this would translate to around £12,864 at maturity. The maximum deposit amount is £500,000.
However, you must visit one of their three local branches in Melton, Grantham or Oakham to open an account.
The bank also offers online savings accounts with other competitive flat rates and easy access Isas. It is not necessary to go to the branches in person for these applications.
Zopa
Trustpilot rating: 4.5 out of 5 stars
Best rate: 4.75 fixed four-year bonds
Easy access standard account rate: 2.4 units
FSCS protected: Yes
Zopa is a British start-up financial services company that started 16 years ago. He founded a peer-to-peer lending company in 2005 and in 2020 founded Zopa Bank, the business’s savings account branch.
After Melton, Zopa offers one of the most competitive rates for two-year or four-year bonds, at 4.65 percent and 4.75%, respectively.
The company had around half a million customers by the end of 2021, but still had a pre-tax loss of £34m. It has registered £968m deposits by clients but is growing fast and offers competitive rates to attract new business.
Prospective new entrants should note that Zopa does not offer Isas, only standard savings accounts. It is a digital bank, so if you want to open a time deposit or easy access account, you will need to apply online via its website or mobile app.
Al Rayan
Trustpilot rating: 2.4 out of 5 stars
Best rate: 2.85 units, fixed 36 months
Easy access Isa rate: 1 pc with a minimum deposit of £50
FSCS protected: Yes
For many savers, Al-Rayan may be one of the lesser-known names regularly appearing on “best buy” savings lists. It is a bank that acts in accordance with Islamic moral values and serves over 9,000 accounts in the UK.
Central to Islamic finance is the idea that money itself has no intrinsic value; This means that you cannot borrow or borrow money from someone and expect to receive benefits.
Al Rayan provides a return on savings by investing in stable real assets such as property or metals. It will never invest in industries associated with gambling, alcohol, tobacco, weapons or pornography. It also never invests in a derivative or bond.
That’s why their accounts offer an “expected rate of profit”, not an interest rate.
Shawbrook Bank
Trustpilot rating: 4.6 out of 5 stars
Best rate: 4.6 bi-annual bonds
Easy access Jesus rate: 1.5 pcs
FSCS protected: Yes
Shawbrook currently offers the best deal for a one-year fixed bond, at 4.55 percent, according to Moneyfacts. The highest rate offered at the bank is 4.6 percent for a two-year bond. The minimum deposit for both is £1,000, the maximum balance is £2 million.
Shawbrook is also a relatively small bank with around 350,000 customers. It earned £197m in profit before tax in 2021 and looked at around £8.4bn in deposits.
Earl Shilton Building Society
Best rate: 2.65 pcs
Easy access Jesus rate: 2.55 pcs
FSCS protected: Yes
Earl Shitlon is another construction company that can trace its history back over 100 years. It offers one of the most competitive cash Isa rates with 2.65 units and 2.55 units. The higher paying account comes with a 90-day notice period, while 2.55 Isas offer instant access.
The bank is located in Leicestershire and was managed by a local family for decades until the 1990s. It has assets of over £149 million and around 14,000 members.
Virgin Money
Trustpilot score: 1.2
Best rate: 4.11 two-year fixed rate bonds and two-year fixed rate cash e-Isa
Jesus rate: 3 pcs
FSCS protected: Yes
According to Moneyfacts Virgin Money currently offers the best available cash Isa rate of 3pc. It calls itself a digital bank, although it has several physical branches dotted around the country.
The bank is part of the Virgin Group, founded by Sir Richard Branson. This business line includes Clydesdale Bank as well as Yorkshire Bank.
