Virgin Bank charges for current accounts

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Richard BransonPA

Richard Branson has his own way of doing things, so we always knew Virgin Bank would offer something a bit different. However, we had no idea that the first big announcement was going to bring such bad news.

Apparently current account customers are going to be charged £60 a year for the privilege of running an account. So what's going on?

Monthly charge

It has emerged that part of Branson's plans for Virgin Bank include a monthly charge for the current account of about £5. The charge will apply regardless of whether you go into the red or not. In return there is every chance that there will be discounts available on other Virgin products, such as flights or gym membership - although nothing has been confirmed yet.

The 111,800 people who already have a Northern Rock current account will not be forced to switch into an account with charges.

Value?

This won't be the first current account to charge a monthly fee: about a fifth of all accounts have these charges, and offer perks in return. The trouble is that many of these accounts never pay back enough in benefits to make it worthwhile, because customers don't want, need or use them.

Branson says that charging a fee means the account can be fair and transparent, so they will make money without the need for unfair charges that kick customers when they're down. Virgin Money chief executive Jayne-Anne Gadhia said: "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."

Trend

However, for many people, the announcement comes as a huge disappointment. When Virgin announced it was buying the good bits of Northern Rock, there was at last a lingering hope that it would mean some much-needed competition in the market, which would force all the other banks to up their game.

Now, instead, we face the worry that this will kick-start a trend towards charges for all current accounts.

But what do you think? Would this put you off a Virgin account? Let us know in the comments.