Virgin Money has launched a new regular savings account, offering flexible deposits and access with 2.25% interest and a Premium Bond-style bonus system offering the chance to win wine, holidays and more.
Unlike most regular savers it’s not a fixed-term account, but will instead mature on 20 October 2017, regardless of when the account is opened.
Accounts can be opened with just £1, and customers can save up to £250 each month. Plus, anyone can open an account – you don’t need to be an existing Virgin Money customer to get it.
Savers are also free to skip a month of making deposits without being penalised, but they won’t be able to make up any shortfall in their savings in later months.
At first glance, the interest rate can be beaten. If you have a current account account with First Direct, HSBC or M&S Bank you’ll earn 6% interest for a year with their regular savers, providing you don’t need early access to your money.
So on the maximum £250 monthly deposit over 12 months, savers would earn £31 interest with Virgin Money, £53 less than they’d get from one of these market-leading accounts.
If you need access to your money within the first year, consider Nationwide’s account, which pays 5% AER. Again, that’s only available to existing customers, though it allows flexible access and won’t punish savers if they miss a deposit.
Alternatively, Leeds Building Society pays 2.3% AER, narrowly ahead of Virgin Money, but with more stringent withdrawal conditions; you’ve got to save between £50 and £250 a month, and you’re limited to a single withdrawal each year. Breach these rules and the rate will plummet to 0.5% AER.
But savers shouldn’t discount the Virgin Money deal immediately as the account has a few benefits over the top paying regular saving accounts.
Firstly, savers are free to make unlimited withdrawals from their account, and won’t be penalised if they skip a payment either. HSBC and First Direct on the other hand will close your account if you make a withdrawal or miss a monthly payment. Even just a £10 withdrawal from either of these accounts during the first 12 months would lead to the account being closed and the rate being slashed to a paltry 0.05%, practically wiping out all of your interest.
Secondly, the Virgin Money account is available to anyone. The top regular savings deals are generally only available to existing customers, as is the case with First Direct, HSBC, and Nationwide.
Thirdly, though least importantly, there’s the prize draw. It is a nice perk, though it shouldn’t drive your decision. Virgin Money will run a quarterly raffle, offering 10 tickets to each account holder. Savers’ chances of winning are boosted with regular deposits - you’ll gain an extra 10 entries for each month you save.
The prize draw is reset quarterly, so savers can earn up to 40 entries to each draw. Prizes include a Virgin Holiday, cases of wine, or offers from Virgin Media and Virgin Experience Days.
For people looking to start saving this account also pays a better rate than you’ll currently get from an instant access account, though it may also be worth considering a high interest current account where you can earn up to 5%.
* HSBC offers 6% AER to people with a Premier or Advance account, or 4% AER to customers with other current accounts.