Earn Virgin miles with the Virgin Atlantic 1-year Flying Club Savings Account – now with a better rate and more miles

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Virgin Money has launched a new Virgin Atlantic 1-year Flying Club Savings Account and sharply increased the miles you can earn.

The partnership between Virgin Atlantic and Virgin Money is now really moving forward.  We have covered the two new Virgin Atlantic credit cards in depth as they are exceptionally good – read our overview here.  The life insurance deal is decent but isn’t going to move the needle for frequent flyers with a bonus of just 5,000 Flying Club miles at present.

We are intrigued by this offer, however – earning miles with a savings account.

Yes, a few months ago Virgin Money launched the Virgin Atlantic 1-year Flying Club Savings Account.  Full details are on the Virgin Money website here.

Virgin Money has just refreshed the offer with a far better underlying interest rate.

How the Flying Club Savings Account works

You make a one-off deposit of between £1 and £1 million into a one year bond.  No further deposits and no withdrawals are allowed over the one year period.

Instead of cash interest, after one year you will receive 1,600 Virgin Flying Club miles for every £1,000 you save.

Virgin Atlantic 1 Year Flying Club Savings Account review

In case you are wondering exactly how this works, and whether you can escape Income Tax if you pay it on your savings (you can’t), this is your answer:

Virgin Money pays you interest based on a rate of 1.36%

Your interest is immediately taken back and used to purchase Virgin Flying Club miles at – effectively – 0.85p per mile

In terms of the income tax position, the interest should be included on any tax return and will count towards your Personal Savings Allowance, like any other savings interest

When the deal launched in June it was only paying 1,400 miles per £1,000 you saved, based on an interest rate of 1.19%.  The jump to 1.36% is therefore significant.

In general, I would be a buyer of Virgin Flying Club miles at 0.85p – except for the fact that I am sitting on over 1.5m of them between my wife and myself and that’s probably enough for now!

As always with these offers, if you know that you will generate more than 0.85p per mile when you redeem (which isn’t difficult) this could be worthwhile.

Virgin Atlantic 1-Year Flying Club Savings Account review

Are you really paying 0.85p per mile?

The 0.85p per mile valuation only holds if this account is ‘top of the market’.

Looking at Moneyfacts, the top 1 year bonds currently on the market from what I consider ‘blue chip’ institutions (although this depends on your personal definition of ‘blue chip’) are 1.3% – 1.4%.  On this basis, the Virgin Money account – at 1.36% – is good.  You can get higher rates from lesser known financial institutions.

But remember ….. 

There are two potential risks to also bear in mind:

You won’t receive your miles for a year so you need to keep in mind the risk of any potential Flying Club devaluation – there isn’t an option to stop the conversion of your interest into miles at the end of the year

We don’t know how attractive, or not, the pricing will be when Air France and KLM redemptions are added to Virgin Flying Club early next year.  For many people this will be a key driver of whether they want to run up a larger Flying Club balance.  If you are happy redeeming on the existing Virgin Atlantic and Delta networks, however, this is not something to worry about.

Virgin Money has now put a bit of life behind this product and it might start getting some traction.  I will be genuinely interested to see how it goes.  You can find out more on the Virgin Money website here.

(Want to earn more Virgin Flying Club miles?  Click here to see our recent articles on Virgin Atlantic and Flying Club and click here for our home page with the latest news on earning and spending other airline and hotel points.)

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Comments

  1. Since we’re on a related topic;

    Any suggestions on using the leftover cash in the limited company? Best thing I could find was some business saving accounts that give 1% interest.

    • Depends on your time horizon amd objective – companies can access most types of investments…

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