Virgin Money Overdrafts

Overdrafts.co.uk — Thu, 15 Mar 2012 06:40:25 +0000

Virgin Money is a very late entrant into the world of UK banking, and finds itself up against stiff competition. The banks have come under fire time and time again, and are rolling out as many incentives as possible to get new customers to come to them and stay with them. Can Virgin Money take the old name of Northern Rock and show that it is different from the herd?

Virgin Money’s accounts with overdrafts have already come under scrutiny, and they’re not even out of the box yet. Reports that all account holders would be charged £5 a month has now been denied, but it does seem that they will levy fees on most account holders. They may be able to offer much lower overdraft interest if they do so though, so we will need to see what they come up for their planned entry into the market during 2013.

They will likely include a hefty incentive scheme to try and take advantage of people’s current dislike for the banking community; a new brand is perhaps worth a lot when people are looking to switch banks. All of the big guns are offering incentives such as £100 free, 6% introductory interest rates, or even £300, in the case of Santander.

With funds in a pinch, a good overdraft rate with flexibility might draw people to Virgin Money, so all eyes will be on the new firm to see what kind of offerings they will come up with this year. They will be keen to try and wipe out the Northern Rock brand as quickly as possible, as it is perhaps the bank most in people’s mind when they think back to the height of the financial crisis.

Northern Rock Overdrafts

Overdrafts.co.uk — Tue, 13 Mar 2012 07:31:42 +0000

Northern Rock is owned by Virgin Money; in fact the Northern Rock brand will be phased out in 2012 and become Virgin. Northern Rock recently came under intense scrutiny in 2007 when it suffered the first bank run in over 140 years as consumers lost confidence in the bank during the height of the international financial crisis. However, the bank has rebounded somewhat in 2012, being purchased by Virgin Money.

Northern Rock’s credit accounts offer overdraft limits to those who qualify. The standard amount is £15 per month at time of writing, with an overdraft interest rate of 11.9%.

Interesting enough, due to the bailout by the government, Northern Rock has their own overdraft to pay back, and an agreed payback scheme has been implemented. The acquisition of Northern Rock by Virgin may change the speed of this overdraft repayment.

Virgin has announced that the first change they will make to the current account is to make no current account free (although this is not yet informed). Customers allegedly will need to pay £5 a month, even if they do not go into overdraft. This is contrary to how many other banks work, over 80% of UK current accounts are free. However Virgin combats this by noting that no bank is offering their services for free; they are levying this cost by reduced interest rates or higher overdraft fees. Virgin plans to offer more extra with their accounts, such as breakdown cover and insurance. These will all tie in with the Virgin brand.

The financial community is now waiting to see whether other banks will follow suit, perhaps making their current accounts paid in exchange to more competitive overdraft rates.