Virgin Money has launched a new current account and mobile app with the bold aim of disrupting the market. But should you care?
The new account comes with a number of flashy features, including a 0.5% interest rate on balances up to £2,000.
Here, we explain how the account works to help you decide whether you should open one.
Virgin Money current account: the details
Virgin Money is technically a challenger bank – like mobile-based offerings Monzo and Starling.
It’s also, since it was acquired by Clydesdale and Yorkshire Bank last year, part of the sixth-biggest banking group in the UK, and balances of up to £85,000 are protected by the Financial Services Compensation Scheme.
The new account has a number of features, many of which some challenger bank customers will find familiar.
- an app with budgeting features including transaction tracking, categorisation of spending, and savings goals
- 0.5% interest paid on balances up to £2,000
- a linked easy access savings account paying 1% AER
- a ‘sweep’ feature which transfers money over from your savings if your current account balance is running low
- electronic cheque payment using a smartphone camera
How does Virgin Money compare with Monzo and Starling?
Unlike leading mobile banks Monzo and Starling, the Virgin Money account is also available in-store at Virgin Money branches.
The table below shows how the Virgin Money account compares with its biggest digital rivals.
|Provider||Overdraft||Paying in||Overseas fees||Earning interest|
|Monzo||Yes – £20 fee-free buffer than 50p per day*||Bank transfer, salary payments, cash deposits via PayPoint, cheques via post||3% charge on overseas ATM withdrawals after first £200 each month||Savings pots that pay up to 1.4% AER|
|Starling||Yes – 15% APR*||Bank transfer, salary payments, cash deposits via Post office, cheques via post||None||Current account interest up to 0.5% AER on balances up to £2,000; 0.25% AER on £2,001 – £85,000|
|Virgin Money||Yes – 19.9% APR||Bank transfer, salary payments, cash deposits and cheques in branch, cheques via app||Yes, 3.75% on foreign currency withdrawals, 2.75% on overseas debit card payments (charges may vary based on tariff)||Current account interest of 0.5% up to £2,000; linked savings account paying 1.00% AER|
*By April 2020 both banks will introduce personalised interest rates, which could be higher
At the moment Virgin Money is behind its competitors when it comes to fees for overseas use.
The bank promises ‘further enhancements’ in 2020, including the launch of a Mastercard with fee-free overseas spending and ‘unique loyalty benefits’. Virgin Money has not confirmed, however, whether this will be a standalone credit card, or the current account’s debit card.
To B or not to B?
The Virgin Money current account isn’t actually as new as it sounds. In its current form, it’s almost identical to an account called B from Virgin Money owners Yorkshire Bank and Clydesdale Bank.
All active B accounts will be rebranded as Virgin Money accounts, just as the B Works branches around the country have been reskinned with Virgin Money branding.
The B website says a new Virgin Money version of the B app is coming ‘with all the same features you already know and love’. So if you were thinking of getting a B account, you’ll now have to apply for a Virgin Money account instead.
Which current accounts pay interest?
Most banks don’t pay any interest at all on current account balances, so even though 0.5% may sound small (it’s 1% below inflation), it’s actually more than the majority of accounts.
That said, there are other bank accounts with higher current account interest rates. The table below has the comparison.
|Account||Interest rate||Min. per month funding|
|Nationwide FlexDirect||5% (for the first year)||£1,000|
|TSB Classic Plus||3%||£500|
|Bank of Scotland Classic with Vantage||1%||£1,000|
|Lloyds Bank Club Account||1%||£1,500|
|Tesco Bank Current Account||1%||£750|
|Starling Bank Personal Account||0.5%||£0|
|Virgin Money Current Account||0.5%||£0|
Although other bank accounts offer higher interest rates, Virgin Money and Starling are the only banks that have these rates without requiring a minimum monthly deposit.
Read our guide to the best high-interest bank accounts to find out more details about these accounts, including perks and Which? customer scores.
Also bear in mind that the best easy-access savings accounts currently pay rates as high as 1.40% – easily beating both Virgin Money’s current account and linked savings account.
- Read more: how to find the best savings account