If you have savings, you’ll be well aware that dire savings rates have become the norm in recent years. And while savings rates are still poor, things are starting to change for the better.
Right now, one easy access account now pays more than 2% interest. Plus, if you’re happy to switch bank accounts, you can even earn as much as 5%. Here’s everything you need to know.
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Savings rates: how can you earn 2% on your savings?
If you want to boost the savings rate on your cash but don’t want to lock away your money, you’ll have to save in an account that allows you instant access.
Right now, Virgin Money’s M Plus account pays 2.02% AER variable interest on balances up to £1,000. It is very much an easy access account given that you can add or withdraw cash as often as you like.
However, it is a current account, so you do have to pass a basic credit check to open the account. However, the check isn’t too harsh. It does’t compare to the check involved when opening a credit card, for example.
While the £1,000 maximum savings limit is low, Virgin also gives you the option of moving any savings you have above this into a linked easy access savings account. This is opened automatically for you. While it pays a lower 1% AER variable, you can earn this rate on up to £25,000. Anything saved above this will earn 0.5% AER variable.
Virgin’s linked savings account also allows you to make unlimited withdrawals. However, anything you take out will have to first be moved into your M account.
Unlike a number of other current accounts out there, there is no minimum pay-in required to keep the Virgin account open. This means there’s nothing stopping you treating it like a normal savings account. In other words, you don’t necessarily have to move your main bank account to Virgin. However, if you can switch a bank account to Virgin, there are additional benefits.
How can you earn an even higher savings rate?
If you’re happy to switch your bank account to the M account, Virgin will boost your savings rate by 3% for a year. This means that you’ll be able to earn 5.02% AER interest for one year on up to £1,000. So if you save the maximum amount for a year, you’ll earn roughly £50 in interest.
As an added bonus, Virgin will also reward you with a £100 Virgin experience day voucher for switching. To get this you must open your Virgin account online and switch within 45 days using the current account switch service. You must also pay at least £1,000 into the account and have two direct debits set up. You’ll also have log into Virgin’s mobile app on at least one occasion.
Do all of this and you’ll get your gift voucher within 14 days.
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How does Virgin’s offering compare to other easy access accounts?
Right now, Virgin’s M account – even without the boosted 5.02% rate – pays well above the top-rated easy access savings account, which is 0.75% AER variable through Atom Bank.
That said, Atom’s account doesn’t require you to pass a credit check as it’s a normal savings account. You can also save up to £100,000 in the account, though only £85,000 of this will be eligible for FSCS savings protection. It’s best not to exceed this limit in any savings account.
If Atom isn’t for you, then you can earn a slightly lower 0.72% AER variable with Cynergy Bank. Importantly, Cynergy’s rate includes a fixed 0.42% bonus for 12 months. Both of these alternative accounts can be opened with as a little as £1.
Are you willing to lock away your cash for a set period? If so, you can earn a savings rate as high as 2.2%. See our list of top-rated fixed savings accounts for the details.
