Virgin Money Current Account

goatfaced

I just got an email to say the savings rate is being reduced to 0.35%, do you reckon the main account will be next?

RG2015

goatfaced said:

I just got an email to say the savings rate is being reduced to 0.35%, do you reckon the main account will be next?

This was announced a couple of weeks ago. The main account will be next but probably not for a few months yet.

https://forums.moneysavingexpert.com/discussion/6240804/virgin-linked-savings-account-reducing-interest/p1

jbrassy

I also managed to eventually log in earlier, but the app was really slow. The app in general is quite prone to not working properly I'm finding. 

ischris85

jbrassy said:

I also managed to eventually log in earlier, but the app was really slow. The app in general is quite prone to not working properly I'm finding. 

I've noticed he same

Bastiat

goatfaced said:

I just got an email to say the savings rate is being reduced to 0.35%, do you reckon the main account will be next?

Not necessarily. Paying 2% in this low interest rate environment does mean that VM is losing money but only on £1000 notional whereas paying an above market interest rate on the saving account could lead to potentially unlimited losses. Many banks are happy to lose money on their current account to attract new customers as long as the losses are capped. 

cricidmuslibale

Bastiat said:

goatfaced said:

I just got an email to say the savings rate is being reduced to 0.35%, do you reckon the main account will be next?

Not necessarily. Paying 2% in this low interest rate environment does mean that VM is losing money but only on £1000 notional whereas paying an above market interest rate on the saving account could lead to potentially unlimited losses. Many banks are happy to lose money on their current account to attract new customers as long as the losses are capped. 

I really do hope you're correct in that the 2% on the current account will be maintained for some time yet! But, as your last sentence implies, once VM see that they have attracted a sufficient no. of new customers for their requirements it is likely that they will at least substantially reduce if not eliminate altogether any interest paid on money held in their current account!

MovingForwards

@cricidmuslibale even their original current account (very basic, can't do much with it bar pay in, use debit card and SOs and DDs) still pays 0.10%.

cricidmuslibale

Good information, thank you! That strongly hints at VM substantially reducing the current 2% interest rate on the modern current account in a few months or so (hopefully longer!) but not eliminating it altogether which is obviously reassuring to anyone (including me) who might otherwise need to withdraw nearly all of the money currently in their modern current account(s).

RG2015

cricidmuslibale said:

Bastiat said:

goatfaced said:

I just got an email to say the savings rate is being reduced to 0.35%, do you reckon the main account will be next?

Not necessarily. Paying 2% in this low interest rate environment does mean that VM is losing money but only on £1000 notional whereas paying an above market interest rate on the saving account could lead to potentially unlimited losses. Many banks are happy to lose money on their current account to attract new customers as long as the losses are capped. 

I really do hope you're correct in that the 2% on the current account will be maintained for some time yet! But, as your last sentence implies, once VM see that they have attracted a sufficient no. of new customers for their requirements it is likely that they will at least substantially reduce if not eliminate altogether any interest paid on money held in their current account!

Limiting the qualifying balance to £1,000 is clever as each account will only earn a maximum of £20 per year. This cost to VM is a relatively small price to pay for substantial positive PR.

Conversely, reducing or removing the 2% would lose VM a substantial proportion of their customer base. This would make no sense as the “innovative” features of the app are really nowhere near good enough to make the account stand out without the 2% credit interest.

BigBlueSky

I assume there is no requirement to use the 'linked' savings account paying only 0.5% ?