Virgin Money has ramped up the competition in the interest-paying current account market – but there are hoops to jump through to benefit from the incentives on offer.
Interest-paying current accounts used to be big business a few years ago, with a number of high street providers jostling to get to the top of the best buy tables by offering high interest rates on small ‘in-credit’ balances. These eye-catching rates meant an opportunity for savers to squeeze a little more from their savings by opening a number of these current accounts. But as interest rates fell elsewhere so too did the high interest current accounts.
However, incentives to open and move seem to be back, so those looking for a new current account could pocket some extra cash, and/or other incentives.
The Virgin Money M plus account is currently sitting in the top spot on our Interest Paying Current Account Best Buy table, paying 2.02% AER on balances of up to £1,000, but if you open a new current account with them, you will have access to the M Plus Saver, which is paying a market leading easy access rate of 1% AER on balances of up to £25,000 and 0.50% on balances above this.
And the good news is that you don’t have to switch your existing current account to have access to it. Just open an M Plus current account which you can do online, via the Virgin Money app, over the telephone or in branch - and if accepted, the M Plus saver is also opened automatically. On £25,000 you could earn £250 over 12 months. Compare this to the high street banks, some of which are paying as little as 0.01% even on linked savings accounts, which means you would earn just £2.50 a year!
In addition to this, Virgin is now also offering a switching incentive, BUT this is only available if you switch to the account using the Current Account Switching Service (CASS). This means you have to switch your main current account over to Virgin with at least two direct debits, which will see your old current account closed – so these switching incentives may not be for everyone. But if they are, the provider is offering a switching bundle that is worth up to £150.
1. If you switch, a 3% bonus is added to the in-credit rate paid on the current account, for 12 months, increasing that headline rate to 5.02% AER for a year. So, on the maximum £1,000 balance, you could earn £50 gross.
2. The other aspect to the switching incentive from Virgin Money is a £100 Virgin Experience Day Gift Card, so you need to decide whether you are likely to use that!
There are some other banks such as NatWest and First Direct that simply offer a cash incentive to switch which may be more appropriate – but once again you are only eligible if you switch and close another current account.
Check before you act
Because there are often Terms and Conditions to these switching deals, it’s really important to check if you are eligible for the cash back or other goodies on offer, and crucially if there are any fees or costs involved, as you could find yourself opening an account that you wish you hadn’t.
Competition in the easy access best buy tables pushes rates up
If you don’t want to fiddle around opening new current accounts to improve your interest, the good news is that the Easy Access market has seen some fierce competition this week and you could earn up to 0.80% with Cynergy Bank, although this account includes a bonus of 0.50% which is applied for the first 12 months.
And Tandem has increased the rate on its Instant Access Saver for the second time this year, to 0.77% AER, for new AND existing customers – this account can be applied for via Tandem’s mobile app – it is a ‘simple’ easy access account, so no bonus to worry about.
Yorkshire Building society is also offering 0.77% AER for savers with at least £10,000 – and for those with £50,000 or more, the rate increases to 0.82% AER – but if your balance falls below £10,000 the rate drops to 0.60%, so it’s important to keep an eye of how much you have in the account.
If you don’t need access, you could earn even more
As our Rates Rundown details further, there has also been some improvements in the rates on offer on Fixed Rate Bonds, especially over the short term. This time Tandem is topping the tables over 1-year paying 1.55%, while over 2-years, Smart Save has gone into the top spot paying 1.81%. On a balance of £25,000 that means earning £387.50 for 1-year, or £452.50 a year for 2-years.
With many banks and building societies failing to pass on any of the base rate increases to their customers, it’s time to vote with your feet and find the best rates of interest that you can.
@savingschampion
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