Virgin Money launches top fixed savings rate with bonus – who is eligible?

Virgin Money has launched a market-leading rate on its fixed savings account for new and existing customers, but not everyone is eligible. 

The provider’s 1 Year Fixed Rate E-Bond Exclusive normally offers a savings rate of 4.65% AER. But this rate will increase by 2 percentage points for those customers who have a stocks and shares ISA with the bank. As a result, they can earn 6.65% – the best savings rate in the market now. 

To get this deal, there are some extra hoops to jump through. Plus, the bonus rate is only on the market until 30 September, so if you’re looking to take advantage, you will need to act fast. 

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We look at how the Virgin Money deal works, how it stacks up against its rivals and if it’s worth getting. 

How to earn 6.65% with Virgin Money

To qualify for the bonus 6.65% rate, customers will need to pay at least £5,000 into a new or existing Virgin Money Stocks and Shares ISA. You will need to do this before 30 September, either by debit card or ISA transfer. 

Then, you will need to open a Virgin Money 1 Year Fixed Rate E-Bond Exclusive savings account before 7 October. Though this account pays 4.65%, you will unlock a market-leading 6.65% by completing the above steps. 

An important point to keep in mind is that the bonus rate only applies to the same amount of money you pay into your Stocks and Shares ISA before 30 September. 

So, for instance, if you pay £10,000 into your Stocks and Shares ISA and £20,000 into your savings account, you will only earn 6.65% on £10,000 in your savings account. The remaining £10,000 will qualify for the regular 4.65% rate. 

You will also need to keep your ISA money invested until your savings account matures (which is one year from when you open the account) to receive the extra 2 percentage points of interest. Otherwise, no bonus will be paid into your account, and you’ll just receive the 4.65% rate.

Rachel Springall, financial expert at Moneyfactscompare.co.uk, said: “The offer from Virgin Money looks tantalising and may well entice savers who are looking to spread their cash across a stocks and shares ISA and a guaranteed fixed-term bond. Applicants will need to ensure they meet the eligibility criteria to get the 2% bonus applied on the one-year fixed bond and remember that investing in a stocks and shares ISA carries risk. 

“Not only that, the Virgin Money Stocks and Shares ISA charges account and management fees, so it would be wise for investors to keep an eye on their pot to see if the growth value is more than the charges.”

“Those considering the stocks and shares ISA must keep in mind that past performance is never guaranteed to be reflected in future returns, so it’s crucial investors are comfortable with their attitude to risk.”

Moreover, you will need to apply for both the 1 Year Fixed Rate E-Bond Exclusive and Stocks and Shares ISA accounts separately. Both accounts have different eligibility criteria, so check if you qualify. 

If you’re not comfortable with taking risks, it’s worth exploring traditional savings accounts or the best cash ISAs, offering up to 5.2%. 

For those prepared to lock up their cash for a year, you can earn 5.26% with My Community Bank. You will need at least £1,000 to open the one-year fixed savings account, and you can save up to £85,000. 

If you want minimal restrictions and want to dip into your savings every now and then, the best easy-access savings account is 5.2% AER with Cahoot. Santander-owned Cahoot Bank gives you the freedom to withdraw, but you only earn interest on balances of up to £3,000.

Should you invest in a stocks and shares ISA?

A stocks and shares ISA is a tax-efficient account that lets you invest in the stock market while being shielded from tax on earnings.  

A recent analysis by investment platform AJ Bell on behalf of MoneyWeek found that stocks and shares ISAs beat cash ISAs despite high interest rates. While the average cash ISA paid 2.7% last year, a stocks and shares ISA investing in global equities returned 12.7%. Meanwhile, an ISA invested in a UK equity fund returned 7.4% on average.

The report also revealed that taking inflation into account, cash ISA customers were losing out with a real return of -1.2%. 

However, when choosing between a cash ISA or stocks and shares ISA, there are a few things to consider. If you have a short-term savings goal of up to 12 months, it’s probably better to go for an easy-access cash ISA. That way, you can access the money as soon as you need it. 

For long-term investments, such as paying for your retirement, a new property, or university costs, investors may benefit from the long-term growth that comes with a stocks and shares ISA.