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Top paying easy access cash ISA offers 3%, but there’s a catch

Paloma Kubiak
Written By:
Paloma Kubiak

Virgin Money has upped the interest rate on its Easy Access Cash ISA Exclusive from 2.25% AER tax free to 3%.

Based on a £1,000 deposit over 12 months, you would earn £30 in interest.

This takes its offering to the top of the best buy table, and is now the second time the rate has been raised in two months.

Virgin Money said it has upped the rate off the back of yesterday’s Bank of England base rate rise which saw it increase to 3% as expected by the market.

The higher 3% AER tax free (variable) rate will be applied to both new and existing customers.

Virgin Money has stormed the easy access cash ISA table, and is well ahead of its nearest competitor – Marcus which pays 2.5% AER tax free.

Only certain customers can apply

However, there’s an important point to note. It is only available to customers with a Virgin Money, Clydesdale Bank or Yorkshire Bank current account (excluding the essential current account or any account opened with Northern Rock).

The Easy Access Cash ISA Exclusive allows customers to top up and take money out. As this is a flexible ISA, it means taking money out and putting it back in won’t count towards your annual ISA allowance (£20,000).

But remember, you’ll need to replace any money you’ve taken out in the same tax year, or you’ll lose that allowance for good. It allows you to bring in existing ISA cash, and there’s no limit on previous years’ ISA transfers.

It can be opened online or in branch, but you can manage it online or by phone.

Interest is calculated on a daily basis and paid into the account on the last working day in December each year, or, when you close your account if that’s earlier.

Hugh Chater, chief commercial officer at Virgin Money, said: “Increasing the interest rate on our Easy Access Cash ISA Exclusive means Virgin Money customers can make their savings work harder.

“We know lots of people are feeling the pinch right now, which is why we’re pleased to offer this new rate to give both new and existing customers a savings boost.”