Raphaels Bank: a great home for your savings you’ve probably never heard of

It might not ring a bell but Raphaels Bank is offering some of the best rates around on fixed rate bonds right now. We take a closer look at this low-key bank and what it offers.

It’s not a name many will recognise, but Raphaels Bank has been around for over 200 years and is one of the oldest private banks in the UK.

Raphael Raphael, a Dutch merchant, moved to London and established the bank in 1787. In 1983 the Raphael family sold it on and in 2004 it was acquired by Lenlyn Holdings plc, the parent company of ICE (International Currency Exchange).

Raphaels Bank provides consumer credit for cars as well as other niche lending areas such as mobility products and season tickets. It funds this lending by raising deposits from UK savers via its fixed rate bonds and notice accounts.

But it’s also got its hand in credit cards, is a leading player in pre-paid cards and has its own network of ATMs which dispenses both sterling and foreign currency in the UK.

Why you’ve never heard of it

You’ve probably never heard of Raphaels Bank because it’s not a bank you will see on the high street.

Raphaels doesn’t have any branches you can pop into. Instead it has four offices dotted around the country in London, Aylesbury, Southampton and Bolton. Despite this absence Raphaels says that it is entirely focused on the needs of its customers and you can contact them over the phone, via email and through the post.

Another reason you might not have heard of the bank is because it often works behind the scenes on things like branded credit cards and pre-paid cards.

For instance, it's behind the Shout Visa Credit Builder card and acts as the issuing bank, which just means the institution you are actually borrowing from.

The Shout card is designed so people with no credit history or one that has been damaged can use it to build up a better rating. For more like it check out: Best credit cards if you have a bad credit history.

You won’t see Raphaels Bank mentioned on the Shout card apart from in the small print. A lot of branded cards are set up like this, which can mean you don’t really know who you are borrowing from. It’s not really a problem in the day-today use of the card, but if you want to do a balance transfer to another branded card you might find that the same issuing bank is behind it, which means you can’t transfer the debt. MBNA for example is the issuing bank behind a lot of branded cards like the Fluid and Virgin credit cards.

Look out for Raphaels Bank on Thomas Cook, Travlex, O2 Ireland, easyJet, Ryanair and Caxton FX pre-paid cards too.

So you could already have a Raphaels Bank product and not even know it.

One product that isn’t so cloak and dagger is its fixed rate bonds, and this is the main reason you should get to know Raphaels Bank.

Fixed rate bonds to shout about

Right now Raphaels Bank has a summer special bond range available to new and existing customers.

Its one-year fixed rate bond will get you a rate of 2.00% on deposits from £5,000. This deal was the market leader until recently when KRBS and Britannia launched slightly better returns of 2.05% and 2.03% respectively. Even so Raphaels' one-year bond still sits in a respectable third in the tables.

Raphaels is also offering a longer three-year deal which pays 2.40% on deposits from £5,000. This rate sits just under ICICI – another non-mainstream bank – which takes the top spot with a rate of 2.55% on its HISAVE fixed rate account.

You can keep on top of the best deals in The best fixed rate savings bonds.

Raphaels Bank is just one of the many unfamiliar names topping the best buy fixed rate bond tables at the moment while mainstream providers take a back seat.

This turnaround is linked to the Government's  Funding for Lending Scheme, which offers cheap money to some banks and building societies in a bid to get them lending. Because non-mainstream banks don’t have access to this fund they still rely on savers to balance their books.

Raphaels Bank said that it tends to go for the top of the tables from time to time according to funding needs. It describes itself as a "simple profitable business" that is unaffected by many of the challenges facing major banks today. The bank doesn’t operate in the investment banking arena, instead it just takes deposit from savers to lend to borrowers in equal amounts.

Can you trust Raphaels?

With mainstream banks not able to cut it right now it’s time to look at the alternatives out there. But a fear of the unknown is natural, especially when it comes to our finances.

However, there are ways to establish whether an unfamiliar-sounding savings provider or lender is trustworthy and will be able to protect your money. You just need to look out for the hallmarks.

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) regulate financial companies in the UK, so a firm that has the authorisation from these two bodies is one you can trust.

Another important label to look out for is membership of the UK Financial Services Compensation Scheme (FSCS). This protects deposits of up to £85,000 for single and up to £170,000 for joint accounts.

Raphaels Bank carries all these hallmarks, so it’s a pretty safe bet.

For more on this topic read Is your money safe with a bank you've never heard of?

Have you had any experience of Raphaels Bank? Would you recommend them? Let me know in the Comment box below.

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