New sharia account offers 1.6% easy-access savings – but should you get it?
Savings rates may have been dropping recently, but Islamic-compliant challenger bank Al Rayan Bank has bucked the trend by launching a new sharia account paying an 'expected profit' of 1.6% variable.
As MoneySavingExpert.com founder Martin Lewis wrote in this week's email, we've seen a series of rate drops among the top easy-access and fixed-rate savings accounts, with top easy-access payers Marcus and Cynergy both cutting the interest they pay to 1.45% AER last week.
Now Al Rayan Bank has topped that with the launch of its new Everyday Saver account, paying 1.6% – though as it's a sharia account which follows Islamic banking principles, that's an 'expected profit rate' (EPR) rather than interest. As a result, the rate isn't technically guaranteed – though Al Rayan Bank's always paid out on its 'expected rate' in the past, and it told us there have even been a few occasions where it's paid out more than its expected rate.
The Everyday Saver account can be opened online, by phone or in branch with £500+. Al Rayan Bank is a fully-regulated UK bank and offers full £85,000 UK savings safety protection. It was previously known as the Islamic Bank of Britain.
For more information on easy-access accounts, plus sharia options, see our Top Savings guide.
How do sharia savings accounts work?
Sharia accounts operate just like normal savings accounts. The only big difference, as mentioned above, is that they pay an EPR rather than interest. And while these rates aren't guaranteed, we're not aware of any UK-based sharia banks that have failed to pay the expected rate in the past.
Sharia accounts are open to anyone, of any faith, and follow a rule not to invest in areas like gambling and alcohol.
Sharia accounts can beat top fixed-rate savings accounts too
It's relatively unusual to see an easy-access sharia account offer a higher rate than traditional easy-access savings accounts, but a number of sharia accounts offer market-leading fixed rates – though again, these are EPRs rather than interest.
For instance, Bank of London & the Middle East (BLME) pays 2.1% EPR fixed for one year, 2.35% EPR for two years and 2.45% EPR for three years – all can be opened online with £1,000+. That beats what's offered by the top traditional fixed-rate savings accounts right now (1.88% for one year, 2% for two years and 2.15% for three years).