Investments  

Product review: Virgin Money Isas

Product review: Virgin Money Isas

Virgin Money has expanded its range of savings accounts with the launch of a two-year fixed-rate Isa, a two-year fixed rate bond, and a one-year fixed rate cash Isa.

The two-year products both have an annual equivalent rate (AER) of 2.06 per cent, while the one-year fixed-rate Isa offers 1.76 per cent.

Customers can transfer existing Isas to either the one- or two-year product and additional deposits are accepted for 30 days once the account has been opened.

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The bond account can be opened with a minimum £1 and additional deposits are allowed for as long as the account remains open to new customers.

Investors should note that withdrawals are not permitted for the fixed-rate bond products during the fixed-rate period. Customers can take out funds from the Isas during the fixed rate period, subject to a charge equivalent to 90 days loss of interest. The tax-free rate is the contractual rate of interest payable where interest is exempt from income tax.

uk.virginmoney.com

Comment:

Interest rates are likely to stay low for longer than initially anticipated, and most economists have speculated that a rate rise will likely happen in the US before the Bank of England decides to make a move.

Virgin Money describes all three products as “competitive” – and they are largely right. The two-year Isa offers an interest rate of 2.06 per cent, while examples of its closest competitors are Coventry at 2.05 per cent, and Halifax, Skipton and Principality, all at 2 per cent.

But there is a much greater range of offerings for two-year fixed-rate bond accounts. The highest AER is offered by Paragon Bank at 2.40 per cent and the lowest at 1.80 per cent from BLME. Virgin One’s product falls around the middle ground at 2.06 per cent.

Beyond the stated AER, consumers should be sure to read the fine print, as some accounts are offered online, in store, through the post, and/or over the phone. Convenience could be a deciding factor when choosing which product to purchase.