Can You Afford to Be an Ethical Saver?

Written by Karen Bryan

ethical saverI discovered Move Your Money on Twitter; it’s a site which campaigns working towards building a better UK banking system. The idea is that individuals vote with their feet, move their savings out of the big High Street banks and into more ethical institutions. While it is a laudable aim, I decided to have a look at the rates of interest paid on these ethical accounts, to judge if I could afford to become an ethical saver.

I’m looking for a new home for my Cash ISA pot, so I need an account which will accept transfers and won’t tie up my money for a long period. The money is currently in a Halifax ISA Saver Online which pays 3.0%, made up of a one year 2.75% fixed rate bonus plus 0.25% variable.

Bearing in mind that it’s hard to get a real return on your savings (a rate of interest higher than inflation), the rate of interest on an ethical account would have to at least match the rate I’m getting on my Cash ISA savings account for me to shift my money. I can’t afford to accept a lower rate of interest, as my savings have already suffered from erosion of value over the last couple of years with low interest rates and high inflation. Another factor in my decision would be security of savings. I’d only open an account where my money was cover by the Financial Services Compensation Scheme (FSCS), whereby I’d get a full refund if the institution went bust.

Unfortunately neither of the two highest paying ethical Cash ISA accounts, the Cheshire BS Direct Cash ISA (3.5%) or the Coventry BS 60 Day Notice Cash ISA (3.25%) account accept transfers in. However, if you haven’t used up this year’s tax annual Cash ISA limit of £5,640, both these accounts are good buys and covered are by the FSCS. There was nothing to match the 3% I’m currently getting in the Halifax ISA Saver Online.

So, sorry, I can’t afford to be an ethical investor at present.

Interest rates correct on 15 May 2012

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