Virgin Money introduces charge for current accounts

| January 6, 2012 | 0 Comments
Virgin Money introduces charge for current accounts

Virgin Money, the new owner of Northern Rock, is to begin charging all new customers for current accounts, even if the account remains in credit.

Virgin Money’s chief executive Jayne-Anne Gadhia “Most people know there is no such thing as free banking.

“Banks have to cover the cost of free current accounts with hidden charges such as overdraft fees.”

Her comment echoes the views of Andrew Bailey, Director of Banking at the Financial Services Authority, who said last month that free-if-in-credit current accounts led to higher charges being levied on other products.

Virgin Money will charge new customers around £5 per month for a current account, amounting to £60 per year and there is concern that other banks could follow suit.

Around 80 per cent of the 50 million current accounts in the UK are free-if-in-credit accounts and Virgin Money’s move has been criticised by consumer groups for putting further pressure on already stretched household incomes.

To soften the blow, Virgin Money will offer discounts on services such as health clubs to fee-paying current account customers.

Virgin Money has also strengthened its savings range with an instant access account and Isa offering 2.85% interest.

The bank says the new Virgin Easy Saver and Virgin Easy Access Cash Isa are simple, fair and transparent.

The 2.85% interest rate is not reliant on bonuses, so returns will not plummet after 12 months as they do with many savings products and both accounts allow customers to make as many withdrawals as they wish without incurring a penalty.

The Isa allows transfers in of cash Isa savings held at other providers.

Both the Easy Saver and the Easy Access Cash Isa are available in Northern Rock branches, online, by post and over the telephone.

Tags: current account charges, Easy Saver, , ,

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