Virgin Money has cut the rates on its Help to Buy Isa for the second time in under two months, meaning new customers can only get 2% on the government’s flagship deposit saving scheme.
A spokesperson for Virgin Money says the rate change will only affect new customers and those who have already signed up for the account will be “entirely unaffected” and continue to get the rate they were promised.
Virgin Money last cut the rate on its Help to Buy Isa product in July from 3% to 2.5%, shortly after Halifax and Santander closed market-beating 4% Help to Buy Isa accounts for new customers in the same month.
Tashema Jackson, money expert at comparison website uSwitch.com says, “Dwindling returns on Help to Buy Isas are a slap in the face for first time buyers trying to save for a deposit.
“What’s more disappointing is that while the Bank of England cut its base rate by just 0.25%, most providers have cut their rates by significantly more than this – up to 2.5% in some cases. This shows just how challenging life can be for savers right now.”
As a result of Virgin Money’s latest chop, the best Help to Buy Isa for most is now Barclay’s deal, which pays 2.25% interest, though some people will be able to do better through their local building society.
Tipton and Coseley, Penrith, and Cumberland building societies all offer 3% interest on their Help to Buy Isas, though the accounts can only be opened by local residents. Similarly, Darlington Building Society still pays 2.55% to local residents who are eligible.
If you’ve not signed up for the Help to Buy Isa yet, and are wondering if it’s still worth it, do read our Help to Buy Isa guide. Don’t be put off by recent scare stories suggesting the scheme is useless– the bonus is a substantial boost to help you save a mortgage deposit.