Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.
Why do some accounts pay expected profit rates? Are the rates not guaranteed?
The accounts that pay expected profit rates are Sharia’a-compliant savings accounts, which do not pay interest due to this being against Islamic law. Instead, depositors’ funds are invested into Sharia’a-compliant activities, avoiding prohibited businesses such as alcohol, tobacco and gambling, which go against Islamic principles. As there is always an element of risk with investments, Sharia’a banks cannot therefore guarantee a rate of return. However, the banks mitigate this risk in many ways, so that the customer’s deposits and return do not suffer. For instance, Bank of London & The Middle East (BLME) states that if a customer’s deposit is not producing the agreed profit rate, the account can be closed early without penalty, the original deposit will be returned in full and the profit at the original Expected Profit Rate will be paid anyway. In addition, to date, Al Rayan Bank states that it has always achieved the expected profit rate offered to its customers.
|1 Year Fixed Rate Bond||1.48%|
|2 Year Fixed Rate Bond||1.65%|
|3 Year Fixed Rate Bond||1.88%|
|4 Year Fixed Rate Bond||2.16%|
|5 Year Fixed Rate Bond||2.14%|
|12 February 2019|
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