Virgin Money hikes savings interest rates but closes multiple account loophole

You can now beat most other interest rates with the bank.

Big changes are coming to the Virgin Money current accounts when it comes to savings from 1 March 2022. There are boosted interest rates on the linked savings account which beat the best rates elsewhere (for now) for a sizeable sum.

But you’ll only be able to get one of the accounts. Here’s what you need to know as a new or existing customer.

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What is the Virgin Money M Plus Current Account?

Launched in late 2020, the M Plus Current account has been one of my top picks for interest rates held in the main current account paying 2.02%, though only on balances of up to £1,000. You were able to open multiple accounts to increase the balance at this rate.

The bank also offers fee-free spending abroad and runs regular switching offers, which right now includes a 3% boost on the main account for 12 months. Here’s my full review.

What is the Virgin Money M Saver account?

With any Virgin Money current account (there’s also the basic M Account and packed Club M account) you also get a linked savings account.

This currently pays a lower rate of 0.35%, but with no limit on how much you’d earn this on. If you have multiple Virgin Money current accounts you’ll get one with each account.

What’s changing?

How much interest you can earn from a Virgin Money account is changing:

M Plus Current Account

The interest rate will stay the same at 2.02% AER (Variable) on the first £1,000, and is currently boosted to 5.02% for a year (a 3% fixed bonus) if you switch into the account as a new customer.

However, the big change here is that it’s no longer (as of 18 February 2022) possible to open up more than one of these accounts in your own name. This ends the loophole where you could boost the balance where you earn that best buy rate.

You can however still open an additional joint account, potentially giving a couple access to 2.02% on £3,000.

M Saver Account

The linked M Saver account (you automatically get this when you open an account) will have two increases from the current 0.35% rate:

• The first £25,000 will earn 1% AER (Variable)
• Above this will earn 05% AER (Variable)

These rates are variable, which means they could go up or down. The interest is added to these accounts on the last working day of March, June, September and December.

You’ll probably only want to save up to £85,000 across all your Virgin Money accounts, the maximum protected via the Financial Services Compensation Scheme (FSCS).

What it means for existing account holders

If you already have a Virgin Money current account and linked M Saver you’ll get all the new rates on your account.

If you already have multiple M Plus current accounts these won’t be closed down. But you won’t be able to open any further ones.

I’ve had confirmation from the Virgin Money press office that existing additional M Plus Saver accounts will also remain open and earn the same rates.

How Virgin Money compares to other savings accounts

Apart from a handful of regular savers, the 2.02% rate still can’t be beaten, though the Claro app pays 2% on £3,000 (iOS only) and Nationwide’s FlexDirect pays 2% on £1,500 (though only for one year). And if you’re new to the bank, that switching offer boosts you to 5.02% for a year.

And now the 1% rate beats what’s on offer everywhere else too. The best rate currently moves between 0.7% and 0.75%, so it’s a significant difference.

How Virgin Money compares to Premium Bonds

I’ve been a big fan of Premium Bonds for the last year. With rates so poor, balances over £5,000 would typically earn the same as or beat rates from the highest paying easy-access accounts. Of course, there’s never any guarantee, but I felt it was worth the punt. You never know, you could even win big (though it’s unlikely).

The Virgin Money increase does change things. You’re now going to get a guaranteed 1% on your money with them. That’s going to be more than most will get with Premium Bonds.

Though that’s the rate I managed to get over a year with £10,000 saved, average luck said I should have got 0.75%. And I’ve heard from plenty of you who got less.

Is the £25,000 limit enough?

Of course, the £25,000 limit on the linked Virgin Saver means it’s not an exact comparison to other easy access accounts (effectively up to £85,000) or Premium Bonds (up to £50,000). So will you need to have additional accounts on top of Virgin Money if you have extra cash?

Maybe in some cases, but for most people no – you really could just have all your savings with Virgin. That’s because the total you want in easy-access accounts rarely needs to be above this.

Aim to have enough to cover three to six months of essentials and anything else you’re saving for in the short term (up to five years). Above this you should consider investing, adding to your pension or overpaying on your mortgage.

Should you move your money?