Investments  

Virgin Money renews rates on its fixed-rate bond and cash Isa range

The fixed-rate bonds, which are available over one-, three- and five-year terms, offer a guaranteed rate a year of 1.75 per cent gross for the one-year period, 2.20 per cent for three years and 2.75 per cent for five years.

These bond accounts can be accessed with a minimum of a £1 deposit. Additional deposits are permitted while the bonds remain available to new customers, but withdrawals are not possible during the selected fixed-rate period.

The fixed-rate cash Isas are also available over one-, three- and five-year periods. Annual rates for these products start at 1.85 per cent for one year, 2.20 per cent for three years and 2.75 per cent for five years.

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The cash Isa accounts accept transfers from existing cash Isa holders and customers can withdraw funds during the fixed-rate period. Withdrawals are, however, subject to a charge equivalent to 60 days loss of interest for the one-year cash Isa, 120 days for the three-year product and 180 days for the five-year offering.

All of Virgin Money’s saving vehicles pay interest each year and monthly interest is not available.

In May this year, the alternative bank launched a similar range of fixed-rate bond and cash Isa products, but with slightly higher interest rates.

According to a Virgin Money spokesperson, the rates are lower this time because of changing market fluctuations.

All these accounts are available to open in Virgin Money stores, online, over the telephone and by post. Rates are the same through all of these distribution channels.

REACTIONS

PROVIDER VIEW

Peter Rogerson, Virgin Money’s commercial director of mortgages and savings, said: “Our updated savings range offers consumers competitive guaranteed rates of return coupled with the choice of term to suit their individual needs.

“We recognise that customers that are prepared to lock their savings away for a period will look for a better return and these products are designed to offer that. Both our bond and Isa ranges include short- and longer-term fixed-rate products, and however they choose to operate their account, customers can be secure in the knowledge their rate will be the same.”

ADVISER VIEW

Dean Smith, director of Bristol-based My IFA Friend, said: “They are top-of-the-range rates for what is out there, but it is all relative as they are below inflation.

“The retail price index and consumer price index, as of August, are at 2.7 per cent, so in summary these are good rates for today’s market, but the point remains that no savings product at the moment is able to keep pace with inflation rates.”

CHARGES

There are no charges applied to opening one of these accounts, but account holders will be charged for withdrawing from the cash Isas within the fixed-rate period.

VERDICT

It is currently difficult to find a savings product that keeps pace with inflation, so it is hard to get excited about newly launched fixed-rate bonds and cash Isa accounts. That said, some interest is better than no interest, although this offer does not stand out as the best on the market. While there may not be a remarkable difference between products, shopping around should present slightly better alternatives.