The savings account market is evolving fast.
Rates are rising seemingly every month and banks are competing for savers’ attention by improving their products as well, so it should be easy to find the right savings account for your needs.
But we’re not just talking about easy access, fixed or notice accounts, there are also some savings accounts that have the bigger picture in mind.
Not only will this type of savings account help you to save money - it might also make the world a better place.
Green savings accounts promise to invest the money you save into ethical initiatives and the good news is they are also offering competitive interest rates.
Last month, NS&I released a new issue of its Green Savings Bonds with an increased interest rate of 5.70% on its three-year fixed-term, which is the biggest rate we’ve seen on this account.
To access the bond, you need to be aged 16 or over and the minimum investment is £100, with the full amount locked in for three years.
Green Savings Bonds were first introduced in October 2021 by the government as a way to help to fund green initiatives. The interest rate on the first issue was a mere 0.65%, but it’s now increased by more than 5%.
Projects funded through Green Savings Bonds include making transport greener by using renewable energy over fossil fuels, preventing pollution and using energy more efficiently.
Since its launch two years ago, more than £915 million has been invested in this type of savings account.
This provides savers with an opportunity to get a return on their investment via a competitive interest rate while also helping to make the world greener.
The banking world has always been competitive, so NS&I is not the only one offering green savings accounts.
Paragon Bank has a green three-year fixed-rate account that has an interest rate of 5.40%, and can be opened with a minimum balance of £1,000.
Paragon has made a commitment to achieve net zero by 2050 and says it will use the deposits made into this account to help support its green lending products, which currently include buy-to-let mortgages with an Energy Performance Certificate (EPC) rating of ‘C’ or above in England and Wales.
Charity Bank also has a range of green savings accounts, including an ethical 33-day notice account with a 2.66% interest rate and an ethical one-year fixed-rate account offering 4.76%, which can be opened with a £5,000 deposit. These accounts promise a social impact by using your money to support charities and social enterprises.
Plus, there's Triodos Bank which says it is 'one of the world’s most sustainable banks' and is suitable for people that want to change the world for the better. It has a range of green savings accounts, including an everyday savings account at 3.45% and ethical savings bonds up to 4.50%.
Green savings accounts certainly give an ethical option for savers who want to make the most of their money, but it’s worth noting that you will find higher interest rates elsewhere.
The top interest rate for a one-year fixed-rate bond is actually with NS&I and its guaranteed growth bond at 6.20%, and this easily surpasses its green offering. Elsewhere, you’ll find a 35-day notice account from Cynergy Bank at a massive 5%, which is a far cry from Charity Bank’s ethical notice account.
This means it’s always worth comparing all savings accounts to find the best deal and weigh up what is important to you. After all, you could always save your money in a higher interest account and then use the interest to benefit green initiatives of your choice.
But, if supporting green savings accounts sounds like something you would like to do - regardless of the interest rates - then there’s never been a better time to start saving.
As a trained journalist, Lucinda has spent the past 10 years writing and editing content for regional and national titles, including The Mirror, WalesOnline and Manchester Evening News. She is now a personal finance editor and specialises in savings, helping people to make confident financial decisions so they can save for what matters most.