You are here: Home - Saving-Banking - News -

Hargreaves Lansdown partners with BLME for savings

Written by: Emma Lunn
The Sharia-compliant bank’s products will be available on the investment platform’s savings marketplace Active Savings.

Hargreaves Lansdown has announced a tie-up with Islamic bank the Bank of London and the Middle East (BLME) which is offering market-leading rates on one, two and five-year fixed rate bonds.

BLME’s savings products will be available on Hargreaves Lansdown’s Active Savings platform which launched last year. Active Savings is an online savings marketplace, which lets you open a single account, then move your money between accounts from different banks and building societies quickly and easily without having to complete another application.

It means, for example, you can put your money into an easy access account, and then move a chunk of it to a fixed term account with an entirely different bank in just a few clicks.

Danny Cox, head of communications at Hargreaves Lansdown, said: “Sharia banks offer some of the best rates around – particularly when it comes to fixed rate savings – and make the rates from the high street giants look like puny small fry. A one-year fixed rate account from the Bank of London and the Middle East offers three times the interest of a high street alternative.

“Sharia accounts may be less recognisable to UK savers, but they are protected by the Financial Services Compensation Scheme in the same way as any other savings account, so getting to grips with them could prove highly rewarding.”

How Sharia banks work

Typically in the UK, when you put money in a bank account, the bank lends that onto someone else and earns interest.

But Sharia banks reflect Sharia beliefs that interest should not be paid on savings. Instead, savings money is pooled and invested in a number of ethical companies – excluding those involved in alcohol, tobacco, arms or gambling. Savers earn a share of the bank’s profits. That’s why instead of getting an interest rate you get an “expected profit rate”.

As with any other bank, what happens behind the scenes doesn’t really make a difference to you, because you put the money in an account, you get the rate you were expecting, and your money is protected by the FSCS. From a savers’ perspective, saving with a Sharia bank looks and feels exactly like saving with any other bank.

However, there is one important difference; with Sharia banking there’s the possibility that part of the way through the fixed period, the bank concerned may feel it can’t deliver the expected profit rate, so will let you know.

At that point, you can take your money out with the profit you have earned so far (at the rate you expected when you started the account) – or you can agree to a lower profit rate. This hasn’t happened so far, but is a possibility.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

Your rights for refunds if travel is affected by strikes

There have been a wave of strikes this year across many different industries, and more are planned over Christ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week