Charity Bank urges charities to review the interest paid on their savings
• 85 per cent of charities earn less interest than the Bank of England base rate
Charity Bank, the ethical bank known for its loans to charities and social enterprises, is urging charities to review the interest paid on their savings.
The call to action comes in the light of recent research conducted by Third Sector and Flagstone, which found that 85 per cent of charities are earning less interest on their money than the Bank of England base rate of 0.5 per cent, with nearly a third earning less than 0.1 per cent interest.
With Charity Bank’s Ethical Easy Access Account offering a competitive rate of interest of 0.75 per cent gross/AER to charities looking for same-day access to their deposits, the bank is suggesting charities could make their money go further, whilst also ensuring their reserves are working for good.
Money saved with Charity Bank is used to provide loans to support the work of charities and social enterprises across the UK. Eligible deposits up to £85,000 are protected by the Financial Services Compensation Scheme, the UK’s deposit guarantee scheme.
The research published in January also highlights that 58 per cent of charities are deterred from switching to other banks by the amount of time and paperwork involved. Charity Bank has recently introduced online applications across all its deposit products, including its Ethical Easy Access Account, thereby reducing the time taken to open an account.
Justin Hort, Head of Savings at Charity Bank, said: “It’s disheartening to think charities are not getting the best possible return on their savings. Applying for our Ethical Easy Access Account online is straightforward and if required members of our savings team are on hand to provide personal support. Because we use our savers’ money to fund loans to other social sector organisations, charities can ensure their reserves are working for good all the time whilst obtaining a competitive rate of interest.”
Since 2002, Charity Bank has provided over £200 million of loans to support organisations working to enrich and improve society.
For more information on Charity Bank’s new Ethical Easy Access Account see the table below, visit www.charitybank.org/eeaa or call 01732 441944.
Charity Bank Ethical Easy Access Account – Summary Box
What is the interest rate?
• The interest rate is 0.75% gross / AER* (If the account balance falls below £10,000 we’ll pay an interest rate of 0.10% gross / AER*).
• Interest is calculated daily, and paid quarterly in March, June, September and December.
• You can choose to have your interest paid to your Easy Access account, another eligible Charity Bank savings account or your Nominated Account.
Can Charity Bank change the interest rate?
Yes. This is a managed rate account. The Terms for Organisations explain how and why the interest rate can be changed.
What would be the estimated balance after 12 months based on a £10,000 deposit? Based on an interest rate of 0.75% gross / AER*, the balance on a £10,000 deposit after 12 months would be £10,075.21. This illustrative example assumes no withdrawals and no changes to the managed interest rate over the period. (The illustrative example does not take into account the individual circumstances of a customer).
What is the tax status?
Interest will be paid gross.
How do I open and manage my account?
• To open an account your organisation must be located in the UK.
• All directors, members, shareholders, trustees and additional signatories must be permanent UK residents and only liable to pay tax in the UK.
• You can open your account online or by post. You can manage your account by email or telephone.
• The minimum deposit required to open this account is £10,000.
• The maximum balance for this account is £500,000.
• The maximum daily withdrawal limit is £125,000.
Can I withdraw money?
Yes, you can make unlimited withdrawals to your Nominated Account or transfers to any other eligible Charity Bank account. Daily cut off times and limits apply and are set out in the Additional Terms sheet. If your account balance falls below the minimum threshold of £10,000 an interest rate of 0.10% gross / AER* will be payable.
• If you change your mind within 14 days of opening your account we will cancel your account without penalty or notice.
• *AER stands for Annual Equivalent Rate and illustrates the interest rate if it was paid and compounded once each year.