Virgin Money current account customers will soon have access to a market leading savings rate of 1 per cent.
It linked savings account is available to anyone with a Virgin Money M Plus Account, Virgin Money Club M Account and its basic Virgin Money M Account.
The rate increase will take effect from 1 March and will be automatically passed on to existing customers.
The rate will rise from 0.35 per cent to 1 per cent on balances up to £25,000. For balances above £25,000, the rate will rise to 0.5 per cent.
Virgin Money is increasing the savings rate on its linked accounts from 1 March with rates rising from 0.35 to 1% for all new and existing customers on balances up to £25k
This means a Virgin current account customer with £25,000 stashed away in the linked saver account will earn £250 in interest over the course of one year.
It beats the best buy in our independent best buy easy-access tables, with Atom Bank this week launching a 0.75 per cent rate.
Hugh Chater, chief commercial officer at Virgin Money, said: ‘Following the Bank of England base rate increase, we want to reward our customers for saving with us and give UK consumers more reasons to bank with Virgin Money.
‘We recognise the importance of supporting our customers in these challenging financial times, and by boosting our linked savings rates we can give customers better value for their savings.’
For anyone with a large sum of cash sitting in their current account earning little or no interest, Virgin Money’s offer may be tempting.
Those switching to Virgin’s Money M Plus Account will also benefit from a £100 Virgin Experience Day gift card, as well as interest of 2.02 per cent on current account balances up to £1,000.
In fact, switchers are currently benefiting from 5.02 per cent on balances up to £1,000 thanks to a 3 per cent bonus rate fixed for 12 months – a £50 return.
Is it a no-brainer?
In terms of the interest on offer, no bank gets close to Virgin Money.
Nationwide pay 2 per cent interest up to £1,500 to its FlexDirect customers, Lloyds pays 0.6 per cent on balances up to £4,000, and 1.5 per cent on £4,000 – £5,000, whilst Santander pays 0.3 per cent on balances up to £20,000 on its 1|2|3 Current Account.
Some banks offer regular savings accounts. For example NatWest and RBS pay 3.04 per cent on balances up to £1,000 whilst Nationwide is paying 2.5 per cent for the first year.
These will be of limited benefit to savers with large cash balances due to the fact they limit customers to maximum deposits each month. In the case of NatWest this is a maximum of £50 and in the case of Nationwide its £200.
A customer depositing the full £50 into NatWest’s regular saver each month could have expected to have earned just £9.88 after 12 months.
However, there are other perks aside from interest that could sway current account customers into switching elsewhere.
For example, currently a whole host of banks are offering cash switching offers to new and existing customers.
NatWest, RBS and First Direct are offering £150, Santander is offering £140 cashback whilst Nationwide is offering a £100 incentive to new joiners and £125 to Nationwide members for switching account.
Those seeking higher returns from a large lump sum may also be better off using a fixed rate savings deal.
The best one year fixed rate deal pays 1.5 per cent, so for those prepared to part with their money for the next 12 months, this will prove a more lucrative option.
£25,000 stashed away in Al Rayan Bank’s one year deal paying 1.5 per cent deal would earn you £375 in interest over the course of the year.
Deposits made into Al Rayan’s one year deal are protected by the Financial Services Compensation Scheme, up to a total of £85,000 per individual.
|Type of account (min investment)||0% tax||20% tax||40% tax|
|Al Rayan Bank (£5,000+) (3)||1.50||1.20||0.90|
|Atom Bank (£50+)||1.45||1.16||0.87|
|Tandem Bank (£1,000+)||1.45||1.16||0.87|
|Al Rayan Bank (£5,000+) (3)||1.71||1.37||1.03|
|Atom Bank (£50+)||1.70||1.36||1.02|
James Blower, head of digital at Moneyfacts also suggests that savers consider other products such as Premium Bonds.
Equally he advises savers bide their time given that savings rates have been on an upward trajectory in recent weeks, following the Bank of England’s two base rate rises.
‘I think its great news for existing Virgin customers to have such a competitive rate on offer, and the cap of £25,000 is generous,’ said Blower.
‘It’s certainly very competitive but it isn’t the best. We also currently have Premium Bonds paying 1 per cent on their prize pool and Suffolk Building Society’s Stepping Stone Isa pays 1.15 per cent for instant access.
‘It’s also not live until March and we could see other providers increase rates in that time.
‘Given that interest rates on best buy savings accounts have been heading upwards, I wouldn’t recommend moving to Virgin solely for this deal but, savers who were considering switching may find it enough to entice them to do so.’
|First Direct 1st Account||£150 switching bonus
£250 interest-free overdraft
Earn 1 per cent via Regular Saver Account
|NA||Above £250 it is charged at 39.9 per cent|
|Nationwide FlexDirect||£100 switching incentive. If you are a Nationwide member, you’ll get £125 for switching.
2 per cent interest up to £1,500 and fee-free overdraft, both for the first year only. After the first 12 months, it’s 0.25 per cent.
Interest-free arranged overdraft for 12 months
|Pay in £1,000 a month.||After the first 12 months it is 39.9 per cent|
|Halifax Reward||The choice of £5 a month paid into your account, two film rentals or three magazine rentals, or a free cinema ticket each month.||£3 monthly fee or pay in £1,500 a month. Spend £500 on your debit card each month or maintain a balance of £5,000.||39.9 per cent|
|Club Lloyds||Pays 0.6 per cent on up to £4,000, and 1.5 per cent on £4,000 – £5,000.
Choose a reward each year from 6 cinema tickets, an annual magazine subscription, 12 digital movie rentals.
£50 interest free overdraft
|£3 monthly fee or deposit £1,500 a month, pay out two direct debits.||After first £50 its 27.5 per cent.|
|Santander 123||£140 cashback incentive
Santander will pay up to 3 per cent cashback on bills. Capped at £5 each month across three categories.
Pays 0.3 per cent on balances up to £20,000.
|£2 a month fee. You must pay in £500 a month and maintain two active direct debits.||39.94 per cent.|
|NatWest Reward||£150 switching incentive
£5 a month back in rewards and 1 per cent back from certain partner retailers.
|£2 monthly fee. Must set up two direct debits a month for £4 bonus, and then log into mobile banking once a month for £1 bonus.||39.49 per cent|
|Starling Bank current account||0.05 per cent interest on balances. Fee-free spending and ATM withdrawals abroad.||Online and smartphone-only bank.||15, 25 or 35 per cent depending on credit score.|
|Virgin Money||A £100 Virgin Experience Days gift card to switch.
Account pays 5.02 per cent monthly interest on up to £1,000 (£50 in interest in one year) and comes with a linked easy-access account paying 1 per cent.
|Apply online, switch through CASS with two direct debits and pay in £1,000 to a linked easy-access account.||19.9, 29.9 or 39.9 per cent based on credit score.|
|RBS Select account||£150 switching offer||You must apply between 3 February and 21 April 2022.
Log into mobile banking app and deposit £1,250 into new eligible account, once opened, before 26 May 2022.
|39.49 per cent|
|Barclays Bank account||Access to Blue Rewards membership with cashback offers including £7 a month, £5 a month for having a Barclays mortgage and 3% back on Barclays home insurance policy.||£4 monthly fee and you’ll need to pay at least £800 into the account each month.||35 per cent|
|Triodos Bank||Low overdraft rate of 18 per cent.
Promises only to lend on projects that make a ‘positive impact’ for people and the planet.
|£3 monthly fee.||18 per cent.|
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