Gatehouse Bank has launched the UK’s first Shariah-compliant Regular Saver account with a competitive rate of 7%.
The bank said the account aims to help young people form positive savings habits by setting money aside every month for a fixed period of 12 months.
The product is open to all UK residents aged 18+ but Gatehouse said it is especially well-suited to young people or those with smaller deposits, as it can be opened with a minimum of £1.
Customers can make monthly deposits of up to £300, which can be done through an unlimited number of transactions.
Increased focus on saving
The launch follows Gatehouse Bank’s consumer research into UK adults’ attitudes towards money, which revealed an increasing focus on saving. Nearly half (45%) of respondents identified as a saver rather than a spender, with one in 10 (11%) adults saying that their mindset had shifted towards saving in the past 12 months due to financial challenges like the cost-of-living crisis.
The same study revealed a generational gap regarding financial security, with a third (33%) of respondents aged 18 to 24, and a similar number (30%) of 25 to 34-year-olds, doubting whether their financial goals were achievable. Meanwhile, 18% of the youngest respondents said they did not know what financial security meant to them.
Gatehouse Bank’s research also showed that young people are more inclined to save for specific milestones such as a new car, a wedding or buying a home. In fact, just under a third (30%) of 18 to 24-year-olds were saving for a house, a fifth (21%) to get married and more than a quarter (28%) to start a family.
Shariah-compliant banking doesn’t allow savers to earn interest in the traditional sense. Instead, Shariah accounts each have an expected profit rate (EPR).
Gatehouse’s Regular Saver product has a variable expected profit rate of 7% paid at the end of the term. To date, the bank has always generated and paid customers the expected profit rate stated when the account is opened.
Withdrawals are not permitted from the account until the end of the 12-month term, after which the account automatically rolls over into a Gatehouse Bank Easy Access account.
Ravi Kumar, senior product manager at Gatehouse Bank, said: “Whether customers are saving for a significant milestone or aiming to build their rainy-day fund, it is important to set specific savings goals, which help to stay motivated and accountable and ultimately create positive habits.
“Gatehouse Bank’s Regular Saver account has been designed to provide a competitive return for customers who make regular deposits and allows them to proactively check progress against their goals.
“While our Regular Saver fills a gap in the Shariah-compliant market, the account is open to anyone, regardless of their beliefs, and we hope it will help set younger generations of savers on the right path towards improving their financial security.”
How does it compare?
Gatehouse’s Regular Saver rate of 7% is only beaten by Nationwide’s Flex Regular Saver Issue 2 which pays 8% – but you need a Nationwide current account to be eligible.
First Direct also pays 7% on its Regular Saver but, again, you need to First Direct current account to be eligible for the account.