Virgin Money is offering a 10% interest deal on cash savings to new current account customers.
The deal is part of a new bank switching deal, meaning if you move your current account to the bank, you can take advantage of a 10% rate.
For anyone looking for the best savings rates, this may look attractive. But to get it, you will have to jump through some hoops and there are restrictions on just how much you can earn from this generous rate.
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Plus, the interest bonus is only on the market until 31 May, so you may need to act fast. How does the incentive work and how does it compare to the rest of the market?
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Earn 10% with Virgin Money
To get the 10% rate, you will have to switch your current account to Virgin Money using the Current Account Switch Service (CASS).
In return, Virgin Money will pay you 10% interest on cash savings up to £1,000, if you leave it in the account for 12 months - so essentially, it works out as a £100 switching bonus.
You will earn no interest on anything over £1,000.
There are three current accounts you can move to with Virgin Money to get the bonus: M account, M Plus account and Club M account.
With the M Plus Account (which has no monthly fee) and Club M Account (which comes with a £12.50 monthly fee), you earn 2.02% (variable) on top of the 10% rate on balances up to £1,000.
So, with the 2.02% rate plus 10% bonus on £1,000, you will end up with £120 after one year.
Kalpana Fitzpatrick, MoneyWeek’s digital editor, says: “While this rate does look attractive, before you buy into the headline figure, see what else is available before you move your bank account.
“For example, if you saved £11,000 with Virgin Money’s Club M account - you would earn £222 in interest, plus the £100 for £1,000 of that - so, that’s £322 after 12 months at best. But, stick it in a top fixed savings account, you can currently earn 5.17% - leaving you with £568 in interest earned after 12 months.
"Even the best easy-access account offers you 5.2% currently, leaving you with interest of £572 over 12 months.
"So, if you are looking to simply boost your savings, then it is always worth seeing what else is in the market as well as with the current account provider you use at the moment.”
If you’re prepared to fix your cash for one year, you can get a 5.17% return with Allica Bank, but it requires at least £10,000 to open the savings account. If you’re looking for a lower deposit amount, the next best account is Atom Bank’s one-year fixed saver, offering 5.15% – and you only need £50 to start saving.
If you want flexibility with your cash, then Santander-owned Cahoot Bank is returning 5.2% and it offers freedom with withdrawals. But, the rate only applies on balances up to £3,000. If you want to save more, Ulster Bank is offering 5.2% too, but requires a minimum deposit of £5,000.
To be eligible for Virgin Money's 10% current account deal, you will have to transfer over two direct debits, close your existing current account and be sure to use the CASS via Virgin. To qualify, you can’t have held a Virgin Money current account previously.
Any interest you earn will be calculated daily and paid to your Virgin account monthly from 1 July 2024 to 30 June 2025.
What else does Virgin Money's current account offer?
If you are looking to switch current accounts and want to move to Virgin Money, then the deal is a good incentive. Here’s what else the accounts offer.
The M Account is the most basic version of its current account and has no monthly fee. The account gives you access to a linked instant access savings account too, offering 2.5% AER on balances up to £25,000.
The M Plus Account also comes with the linked saver, plus 2.02% interest on up to £1,000 in your current account, fee-free spending and cashback at selected retailers. The biggest perk here is, you get access to its exclusive cash ISA rates:
- Earn 4.76% with Virgin Money’s easy-access cash ISA
- Earn 5.05% with Virgin Money’s one-year fixed ISA
While the easy-access cash ISA isn’t competitive compared to the best cash ISAs on the market still boasting rates above 5%, its one-year fixed cash ISA is market-leading. Right now, one-year fixed cash ISAs are offering around 4.7% in the wider market, so its 5.05% is generous.
If you saved £1,000 in the fixed ISA, you would earn £50.50 after one year, tax-free. A £5,000 balance in the cash ISA would give you a £252.50 return after 12 months, and if you maxed out the ISA with £20,000, you would end up with £1,010 after one year.
Virgin Money’s Club M Account is a packaged bank account, which includes all the perks on the M Plus Account and more – but at a cost of £12.50 a month.
If you qualify for the 12% bonus interest on £1,000 for 12 months, each month you would receive £10. It means you would essentially be paying £2.50 a month for this packaged bank account.
Additional perks in the Club M Account include family travel insurance, family mobile and gadget cover, and UK breakdown cover for the account holder.
Are there other switching deals?
Currently, Virgin is the only bank switching deal on the market.
Between February and April, we saw competition heat up with around five providers trying to lure customers in with their cash incentives. HSBC offered up to £220, and at the same time we saw £200 from NatWest, First Direct put £175 on the table and Lloyds gave away £175 to bank switchers.
Switching deals also tend to have a short lifespan. First Direct was the last deal on the market, which disappeared on 22 April – it was available for less than a month. Virgin Money is also going down the same route, with its deal ending on 31 May.
How to switch current accounts
Most banks use the CASS to help you switch current accounts, as it makes it a quicker and seamless process.
First, you will need to open a new current account, and then request to switch via the CASS. This is usually done on the provider's banking app or online.
The CASS will then close your old current account, and move any direct debits, money and standing orders to your new account within seven days.
The good thing about the CASS is that, for up to three years, any money that tries to leave or is paid into your old account will automatically be moved to your new current account.
