Making healthy financial decisions as a couple

Grow your money and make a positive impact with an ethical savings account

Feel good about saving by choosing a financial institution that cares.

Financial institutions make their money by using yours to lend to others, but now you can indirectly support a sustainable environment and other causes that matter to you by choosing a bank that offers ethical investment accounts.

What is an ethical savings account?

An investment can be considered ethical if it has one or more of the following characteristics:

  • It’s offered by a financial institution that makes a commitment to avoid having a negative impact on our society or environment. These principles will directly impact the way in which the bank chooses to invest and lend the money you deposit into your account.
  • It donates some or all of the interest earned to a registered charity or community group.
  • The bank offering the account only lends to ethical organizations.

Besides opening an account with a bank that donates to causes you care about, you can also open accounts that invest your money into businesses or industries that make a positive impact. For example, you can open a Tax-Free Savings Account (TFSA) to hold investment in stock funds that support businesses devoted to developing green technologies.

How does an ethical savings account work?

Banks that offer ethical savings accounts structure their products in the same way as other financial institutions. Depending on the type of product you choose, the money you deposit will attract interest and fees based on your daily balance.

Nathaniel decides where to save

john2-case-study

Nathaniel wants to open a savings account but is concerned about how his money will be used while it’s in the bank. After comparing various financial institutions, he finds a few that work to reduce the impact it has on the environment.

Noting that the interest rates and other features offered by these institutions match what other major banks offer, he chooses to save with a bank that also donates a percentage of his annual average balance to a registered charity that benefits children from low-income families. Nathaniel has found a way to responsibly manage his money and help make the world a better place at the same time – a double win!

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What are the different types of ethical causes I can help?

There are a number of ethical causes being supported by various banks and other financial institutions, which gives you some variety in choosing one that impacts issues you feel passionate about:

Community volunteers in a huddle

Contributing to your local community

Local financial branches can make a choice to only invest in local businesses and causes that directly affect the surrounding community.

Community volunteers picking up garbage

Promoting environmentally-friendly practices and sustainability

Ethical banks that focus on improving the environment will research their business partners and customers thoroughly to ensure that they are not participating in any practice that is polluting the planet or causing damage to natural resources.

Koala sleeping in a tree

Standing up for animal rights

Certain ethical savings accounts may make efforts to support institutions that protect and preserve wild and domestic animals.

Politician at a community debate

Supporting social or political causes

If you feel passionate about the beliefs of a particular political or social movement, you can find an ethical savings account that financially supports that particular cause.

How do I choose an ethical savings account?

Whether you’re looking for your first account or thinking of making a change, consider the following when searching for the best ethical savings account:

  • Your current bank’s values. If you already have a savings account, check their website to examine what their investment values are now. If you can’t find the information, you can call customer service or visit a branch to find out more.
  • Your personal beliefs and values. Think about the causes that you are passionate about and how you can make a positive difference to society or to the environment to narrow down your choices.
  • If you’re ready to switch. If you’re not comfortable with the investing principles of your current bank, or find one that is more suited to your values, it’s usually easy to switch your accounts by providing your new bank with the details of your current accounts.
  • How your money is being invested. Once you understand what your bank’s investment policies are, you can find out where your savings are being invested now. Study different types of investment you can make with your account, such as mutual funds and exchange-traded funds, and find ones that funnel money into causes you support.

What are the pros and cons of having an ethical savings account?

Pros

  • Have a positive impact on society. You can contribute to a positive cause very easily and support a bank or credit union that promotes these causes as well.
  • Earn interest while you’re making a positive impact. Even as you make a conscientious effort to support ethical banking, you’re still able to earn interest on your savings and strengthen yourself financially.

Cons

  • Limited range. Not every bank is devoted to intentionally pursuing ethical practices. If you want a bank whose morals align with your own, that will limit your options when searching for the right account.
  • It might not be fee-free. If you find an ethical savings account offered by a credit union or mutual bank you may need to first meet the membership requirements and pay for your shares before you can apply for the account.
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Using a regular savings account to support ethical causes you care about

It’s possible use any interest-generating account you already have to support the causes you care about. If you aren’t in a position to switch right now to an account specifically created to support positive causes, you can commit to giving some or all of the interest earned from your current account to a group or movement you want to help.

If you’re curious about regular savings accounts with competitive interest rates, check out our comparison table below. Also, take a look at our detailed guide to savings accounts to learn more about finding the account that’s best for you.

Name Product Annual Interest Rate Promotional Interest Rate Minimum Balance Fees
1.10%
2.75%
$0
None
Earn 2.75% interest for 6 months when you open your first Tangerine Savings Account by October 31, 2019 (up to a maximum of $1,000,000).
2.30%
N/A
$0
None
Enjoy free and unlimited daily transactions, no fees and no minimum balance with an EQ Bank Savings Plus Account.
1.60%
Up to 2.65%
$0
None
Earn up to 2.65% interest for 4 months when you open a Meridian Business Advantage Plus Savings Account by December 31, 2019.

Compare up to 4 providers

Bottom line

You might need to do some extra research to find a financial service provider whose ethics line up with your own, but once you do, you can feel good knowing that you’re saving money and supporting a good cause at the same time.

Savings accounts can provide a great way to help preserve and build up your resources for the future. Find out more about the advantages and disadvantages of savings accounts here.

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