Virgin Money boosts interest on fixed cash ISA to ‘excellent’ 5.61%

Virgin Money has improved its position on the table of fixed cash ISAs with an interest rate increase to 5.61 percent and has earned an “excellent” rating from Moneyfactscompare.co.uk.

Savers can open Virgin Money’s Two Year Fixed Rate Cash E-ISA (Issue 610) with a minimum deposit of £1 and interest can be paid monthly or annually.

Commenting on the deal, Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Virgin Money has changed the issue numbers and increased the rates on its Fixed Rate Cash E-ISAs, including its two-year deal.

“The deal now pays a rate of 5.61 percent yearly and secures a prominent place in its sector. Investors who want to utilise their ISA allowance and are happy to lock their cash away for two years may then find this an attractive choice.”

Ms Springall added: “Savers will also find a monthly interest option is available that pays 5.47 percent gross, which may appeal to those looking to supplement their income. Overall, this deal earns an Excellent Moneyfacts product rating.”

This account can be opened online by UK residents aged 16 or over and only one account is allowed per customer.

Withdrawals are permitted, however, these will be subject to a charge equivalent to 90 days’ loss of interest on the amount withdrawn, if made during the specified fixed term.

Savers with Virgin Money can also have access to special deals across the wider Virgin Group that can help people save on everyday essentials, as well as days out and holidays.

Cash ISAs come with a number of additional benefits, such as enabling savers’ money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA).

ISAs that offer a fixed rate of interest can also help add another layer of certainty to saving, as it means the bank or building society cannot change the rate during the length of the term.

But while Virgin Money may be offering a more attractive deal, it isn’t currently topping the table of two year fixed cash ISAs. NatWest’s Two Year Fixed Rate ISA (Issue 327) is offering an AER of 5.9 percent.

The account can be opened by UK residents aged 16 and over online, in a branch, or by phone with a minimum deposit of £1,000.

Interest is calculated daily and paid annually to the ISA on the first business day in April and on the maturity payment date.

However, those who want to withdraw any funds before maturity on September 4, 2025, will have to close the account and an Early Closure Charge will be applied.

This will either amount to the “lower of the amount of interest earned” or a charge equivalent to 90 days’ interest.

The deal is only available until August 14, 2023, to existing customers and August 9, 2023, to new customers. The Royal Bank of Scotland (RBS), another brand owned by NatWest Group, is offering the same cash ISA deal and terms.