Virgin Bank Accounts
Virgin Money to charge new customers for current accounts
Virgin Money have announced plans to begin charging all new customers for current accounts, following their takeover of Northern Rock.
Virgin Money intends to charge new customers around £5 per month for a current account, even if they never go overdrawn.
This will add up to charges of £60 per year, which has prompted criticism from consumer watchdogs. There are fears that the move could prompt other banks to follow suit, leaving the consumer out of pocket.
There are an estimated 54 million bank accounts in the UK, and at the moment only around one fifth of them have charges.
But Virgin Money has said that the current system is not suitable, and is costing banks too much.
“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,” said Virgin Money chief executive Jayne-Anne Gadhia.
Virgin Money purchased Northern Rock from the British taxpayer for £747 million, acquiring a £14 billion mortgage book, and a £16 billion retail deposit book in the process.
It also acquired more than one million Northern rock customers, and 2,500 of the bank’s employees.
Speaking after the announcement of the takeover, Virgin Group founder Richard Branson said that the takeover was good news for the banking sector.
“I'm delighted we will get the chance to work with the loyal staff of Northern Rock to create a new force in the market,” Mr Branson said.
“Virgin has a history of entering new sectors to improve service and provide value for customers. We plan to do the same in banking.”
Virgin Money have confirmed that they will be charging new customers for current accounts, but that the fees would be entirely transparent. Customers who pay for a current account may receive discount on other Virgin products, such as flights or TV subscriptions.