Savings Accounts

Savings accounts generally pay a higher rate of interest than current accounts, but often have restrictions on how easily you can withdraw money. For example, you may have to give a month’s notice, which has the advantage for your bank of certainty about the availability of this money for supporting loans and investments.

There are two main ethical issues with savings accounts.

Firstly, what the bank does with the money is all the more important than with a current account because they are more likely to be actively using it. You may want your bank to rule out certain investments or to actively seek out others.

Secondly, there are questions of usury, or lending/receiving money at interest. Some choose not to have savings accounts because they object to this practice. Others point out that many objections to usury are based on the point that usury generally allows a lender to exploit a borrower. If you have a savings account, you are technically the lender, but the bank usually has far more power than you do. Your bank is probably lending out money at far higher interest rates than it is paying for your savings account.