The bank confirmed earlier today it was increasing the rate of its easy access savings account to a “competitive” level. Savers will get a boost to 2.52 percent if they use the product which represents the fifth rise to the linked savings rate for customers in 2022 . This comes amid a wave of interest rate hikes from high street banks and building societies which have arisen following the Bank of England’s decision over the base rate.
As of December 22, 2022, the linked savings rate has increased from 2.02 percent to 2.52 percent AER.
This will benefit both new and existing customers with the Virgin Money product on balances up to £25,000.
It should be noted that the interest rate will jump to 2.02 percent AER from 1.51 percent AER balances above £25,000.
On top of this, all rates are variable and this increase is automatically passed on to existing customers.
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Hugh Charter, the chief commercial officer at Virgin Money, outlined why the bank is opting to offer this “competitive” interest rate at this time.
He explained: “We know that times are tough at the moment, and we want to make sure new and existing customers are able to make the most of their savings.
“Heading into the new year, this competitive rate offers a boost to savings with the benefit of an easy access account.”
Among the Virgin Money current accounts which have an automatic linked savings rate, include the M Plus Account, Club M Account and M Account.
Due to this, each savings account is accessible for customers who want to easily manage their money and transfer savings to and from their current account.
This most recent decision by Virgin Money comes soon after the most recent Bank of England base rate increase.
Earlier this month, the central bank’s Monetary Policy Committee (MPC) voted in favor of hiking the base rate to 3.5 percent.
With this move, this is the ninth consecutive rise by the Bank of England since December 2021 and the base rate is now at its highest level for 14 years.
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The primary reason the central bank has opted to make this controversial decision is due to the UK’s soaring inflation rate, which is at a 40-year high of 10.7 percent.
As hikes to interest rates attempt to curb inflation and boost savings accounts, those with mortgages and debt repayments are finding themselves paying more as a result.
Connor Campbell, a business finance expert at Nerdwallet, outlined why it is still “not surprising” the Bank of England is continuing to raise the base rate despite this.
He explained: “The UK is in the midst of a recession, and inflation is near its highest level for decades.
“It’s not surprising then, to see the Bank of England raising interest rates in an attempt to bring inflation back down towards the long-term two percent target.
“The decision is likely to be a major setback for those small businesses that have been relying on business loans to help them navigate the ongoing cost of living and energy crises so far, with the new interest rate potentially becoming the determining factor as to whether they can continue to operate.
“This news comes at an unfortunate time, with the many small businesses currently in the middle of a difficult Christmas trading period left worrying about what the new year might mean for the future of their organization.”
The next announcement by the Bank of England regarding interest rates will take place on Thursday, February 2, 2023.