Sharia-compliant savings

Sharia-compliant savings accounts provide the same day-to-day banking services as mainstream current accounts. But they don’t give you a return on your money or offer overdraft facilities as the principle of paying or charging interest is against Islamic law.

When might a Sharia-compliant account be for you?

Any money invested will be kept separate from other bank accounts – it won’t be used to generate interest or be invested in banned businesses.

A Sharia-compliant savings account is for you if you:

  • want to bank according to Islamic law
  • want your savings to grow through Sharia-compliant profits, not through interest
  • don’t want your bank to lend your money to businesses that provide goods or services – such as alcohol, tobacco and gambling – that are against Islamic principles.

How Sharia compliant savings work

With a Sharia-compliant savings account, instead of lending out your savings and charging interest then passing some of this on to you, the bank uses your money in a way that’s consistent with Islamic beliefs.

Your bank will follow the advice of a panel of Muslim bank advisers to make sure that profit-generating activities are Sharia-compliant.

Some of the profit the bank earns from these activities is returned to you, allowing you to grow your savings without earning interest.

Instead of an ‘annual interest rate’, you will earn an ‘expected profit rate’. The bank will tell you what this rate is. You can use this rate to compare your estimated returns with a saving account that pays interest.

Where to get a Sharia-compliant savings account

These banks offer Sharia-compliant accounts to customers in the UK:

How secure are Sharia-compliant accounts?

Cash you put into UK authorised banks, building societies or credit unions is protected by the Financial Services Compensation Scheme (FSCS).

The FSCS savings protection limit is £85,000 (or £170,000 for joint accounts) per authorised firm.

It’s worth noting that some banking brands are part of the same authorised firm.

If you have more than the limit within the same bank, or authorised firm, it’s a good idea to move the excess to make sure your money is protected.

For more information about the banks that are part of the Financial Services Compensation SchemeOpens in a new window see the Which? website.

If things go wrong

If you’re unhappy with the service you get from your bank or you want to make a complaint, read Claiming compensation if you’ve been mis-sold.

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