Virgin Money announces charges for new Northern Rock accounts

Friday, 06 January 2012 02:55

After formally completing the takeover of Northern Rock this week, Virgin Money has announced that it is to begin charging all new customers for current accounts, even if they do not go into the red.

It is thought account holders will pay around £5 a month to bank with the company, but Virgin Money's chief executive Jayne-Anne Gadhia said the costs are justified.

"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," she pointed out.

Customers will be offered benefits such as discounts on other Virgin products, something the company believes will be more useful than the perks offered by other fee-charging banks, which include travel insurance and breakdown cover.

Currently, around 80 per cent of current accounts are free, but consumer groups say they are worried that Virgin's move will persuade other banks to follow suit, something people struggling with rising living costs could do without.

Virgin Money has also announced a new instant access account and a 2.85 per cent Isa since its Northern Rock takeover.

Last month, Barclays announced that it is to increase unauthorised overdraft charges on its Cash Card account, meaning people who attempt to draw out money they do not have could be forced to pay up to £24 a day.

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