Al Rayan Bank/Raisin 5-year Fixed Bond, Paying at Maturity?

karl10247

Hello all,

I see there is a new 5-year fixed bond with Al Rayan Bank via Raisin at 4.55% AER.
See here ALR005 - 5 Year Fixed Term Deposit - Raisin

On Moneyfacts this bond shows interest is paid "On Maturity (Compounded Annually)".
This is what i want - bonds that reinvest your interest, compound it and you theoretically don't get taxed until maturity i.e. the 5th year in this case.

I am however dubious about this as many people have explained to me that bonds taken out through Raisin ALWAYS pay away the interest to the Raisin account.

I studied the T&Cs in the link above and can see no mention of this but id appreciate it if someone with a better eye than me could set me straight as to whether this bond reinvests interest (i.e. not accessible) each year or pays it out to your Raisin account.

Thankyou in advance

Bigwheels1111

Read this,

What is the profit rate?

4.55 % AER Gross/AER (this savings account offers expected profit rather than interest as it follows Sharia principles). Since it was founded in 2004, Al Rayan Bank has always met the expected profit rate it has quoted to customers. AER is the Annual Equivalent Rate and represents what the expected profit rate would be if profit was realised and paid once each year. Profit is calculated daily, reinvested annually and is payable on maturity. Profit will be paid gross without prior deduction of tax.

https://www.raisin.co.uk/term-deposit/alr005-5-year-fixed-term-deposit/#bank-product-details

Its hard to find detals sometime.

I had to ring and ask where a pdf sheet was as I could not find it.

Sea_Shell

Also be aware that Raisin don't report maturity interest to HMRC (apparently from other posts on the subject), so you need to keep your own records and update them if necessary.

karl10247

Thanks for your replies both. I have zero confidence in the banks (particularly raisin) to stick to what they say in their very loose T&Cs. On another thread there was consensus that Raisin ALWAYS pay away your interest from the provider to your Raisin account annually irrespective of the providers T&Cs. If thats not the case then knowing when a provider will report the interest to the HMRC is a complete minefield. When a provider says "At maturity" for a multi-year bond you'd expect them to report ONLY AT MATURITY however i've read many accounts on this forum where banks report annually even if your interest is "not accessible".

Not sure whether to roll the dice and go with this bond, if it were just Al Rayan i would but through Raisin.... hmmmmmmm 

1spiral

I have used Al Rayan on and off over the last 10 years or so with no qualms about sharia principles and expected profit rate but would have greater concern about tying into a long term bond under those rules unless they have a get out clause if they fail to meet their expected profit rate.

Bigwheels1111

If they fail to meet their expected profit rate you get paid up to said date, you can then get your money back.
According to MSE no sharia bank has failed to pay out.