Shawbrook Bank launches new top paying 2.02% savings account – but you have to lock cash away for a year

SAVERS looking to make the most of their money might want to consider opening Shawbrook Bank’s new account, which pays a market-leading rate of 2.02 per cent.

So save £1,000, for example and you’ll have £1,020 at the end of the year.

Shawbrook has launched a new top-paying one-year fixed savings accountCredit: Getty – Contributor

But there is a catch, to get the account you need to be willing to lock your cash away for a year – and you won’t be able to get your hands on it before then.

If you’re comfortable doing that you can open an account with a minimum of £1,000 and save up to a maximum of £2million.

Of course, if Shawbrook Bank were to run into financial difficulties cash is only protected up to £85,000 by the Financial Services Compensation Scheme (FSCS).

You can also only open the account online, although once opened it can be operated either online or by phone.

The account swoops to the top of the one-year fix best buy tables pipping previous leader Metro Bank into second place with its lower 2 per cent rate.

Although Metro Bank’s account has a lower minimum balance of £500 so it may be better if you’ve got less cash to save.

There are are a handful of Islamic banks that beat Shawbrook’s rate for one-year fixes, with BLME paying the most at up to 2.2 per cent.

But the interest rates on these accounts isn’t guaranteed as they can’t technically pay interest.

Instead they pay an “expected profit rate”, although consumer site MoneySavingExpert.com says it’s not aware of any UK-based sharia banks that have failed to pay the expected rate in the past.

Rachel Springall, finance expert at comparison site Moneyfacts, said: “It’s fantastic to see Shawbrook Bank launch head-turning fixed rates for savers searching for a decent return on their hard-earned cash.

“On fixed rate bonds, Islamic banks actually take the reins for the market-leading returns – which are expected profit rates.

“These Islamic accounts in the best rate tables are fully covered by the FSCS and regulated by the Financial Conduct Authority.

“But Islam teaches that money has no intrinsic value, so individuals cannot be charged or earn interest.”

Basic rate taxpayers can earn £1,000 worth of interest from savings tax-free (it’s £500 for higher rate taxpayers while additional rate tax payers don’t get an allowance).