Savings rates have come crashing down in recent weeks but there is good news for savers with Al Rayan’s new account
Despite savings rates plummeting, Al Rayan Bank is launching a new market-leading easy-access account at a rate of 1.60%.
The Everyday Saver account offers an expected profit rate (EPR) of 1.6%, placing it at the top of the instant access savings best buys.
Customers can open and operate the account online, by phone, in branch and by mobile app with as little as £500.
The account significantly beats other easy access best-buy tables on the market, with its nearest competitor, Marcus by Goldman Sachs offering 1.45%.
Anna Bowes, co-founder of Savings Champion, says: “This is a highly competitive move from Al Rayan Bank, which is better known for offering competitive rates in the fixed-term bond market.
“The account leaps straight to the top of the best buy table, at a time when the best easy access rates have been slipping slightly.
"It will be interesting to see if it reignites the battle of the easy access best buys, or whether the current economic uncertainty leaves the other key players more cautious.”
Most savings and Cash Isa accounts on the market offer an Annual Equivalent Rate (AER), which is a guaranteed rate of interest.
In order to comply with religious rules, Sharia accounts, such as those offered by Al Rayan, offer an EPR.
This is because under Islamic law money is banned from generating money - like interest. Instead the EPR is generated from profits made investing in ethically-selected companies.
Al Rayan Bank is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. The Bank is a member of the Financial Services Compensation Scheme (FSCS), so your money is safe up to £85,000.
While the EPR may put off some savers, Al Rayan has been in operation since 2004 and has always achieved the expected profit rate it has quoted to its customers.
The rate of 1.6% from Al Rayan easily blows the opposition away.
The Marcus account rate of 1.45% comes with a 0.10% bonus for the first 12 months. This means that after a year your rate of saving will drop to 1.35%.
The rate was recently cut from 1.5% after nearly a year at the top of the best buy table.
Coming in just behind is Virgin's Money Double Take E-Saver and Principality's Building Society Online Saver, both at 1.43%.
Things are not going well for savers at the moment with lenders currently slashing rates.
With the Bank of England likely to cut interest rates in the event of a no-deal Brexit, experts are predicting things could get even worse
James Blower, industry expert and founder of the Savings Guru, says savers will need to get in quick as the account might not be available for long.
He says: “In the current environment, this is a great rate from Al-Rayan. Some savers are sceptical of using banks that pay expected profit rate, because of the lack of guarantee on rate but this is less of an issue on easy access where switching isn’t restricted.
“I suspect this rate was chosen before the recent reductions from Marcus, Shawbrook and Virgin. Given Al-Rayan’s small balance sheet, and the fact this rate will be popular, it’s unlikely to be available for long so interested savers should move quickly to secure.”