Virgin Money has bolstered its range of Isas by launching new products and increasing interest rates on new issues of its instant access and fixed-rate saving products.
The Easy Access Isa, which comes with no access restrictions, pays a bonus-free variable rate of 1.50 per cent and accepts transfers from existing Isas.
The new issues of fixed-rate Isas and bonds, on the other hand, are available over one- and five-year timescales.
Both one-year offerings offer an annual equivalent rate of 1.76 per cent, while the five-year ones pay 3.00 per cent.
Virgin Money’s fixed-rate Isas accept transfers in, and additional deposits are accepted for 30 days after the account is opened. Additional deposits can be made into fixed-rate bonds for as long as the bonds remain available to new customers.
A number of providers in recent weeks have launched or updated their Isa range in a bid to be the number one choice as the new rules from the Budget are implemented.
The new Isa was launched 1 July and enables savers to deposit up to £15,000.
But despite this massive increase in the allowance from the current cash limit of £5,940, a survey by Virgin Money indicated the new rules could make little difference.
Four in 10 people said they still did not understand the upcoming changes, while just one in three of those without an Isa understood what it meant.
In addition, 67 per cent said the changes would make no difference to how likely they were to take out or increase the amount they have saved in an Isa.
Provider view: Anthony Mooney, financial services director at Virgin Money, said: “Our new Easy Access Isa offers customers instant access to their money, without restrictions, at a market-leading clean rate, with no gimmicks such as short-term bonuses or access restrictions. It is simple, transparent and with no catches – it just offers a straightforward, good value for money product. Our research shows 75 per cent of people have cash savings of less than £15,000. For most people a simple, straightforward Isa is the only savings account they need, with the added benefit of giving them tax-free returns on all of their savings.”
Adviser view: Dan Clayden, director of Devon-based Clayden Associates, said: “The rates sound pretty reasonable and it does not surprise me that Virgin Money may be the first of the few lenders to start increasing its rates off the back of recent comments made by Bank of England governor Mark Carney on the direction of interest rates. We may see interest rates creep up soon, which is obviously good news for savers, and also linked in with the increased Isa limit. This should see rates start to go up.”
Charges: Savers can withdraw funds from fixed-rate Isas during the fixed-rate period, subject to a charge equivalent to 60 days’ loss of interest for the one-year product and 180 days for the five-year product.
Verdict: As the Nisa season kicks into full gear, Virgin Money stole all the headlines at the time of its launch for market-leading rates on its one- and five-year fixed-rate cash Isas. As long as the base rate remains at rock bottom, this is encouraging for savers and an added incentive to save now that the allowance has reached £15,000.
