One of the more interesting ways of earning Virgin Atlantic Flying Club miles is with the Virgin Atlantic 1 year Flying Club Savings Account.
We haven’t covered this for almost a year so, as you can now redeem Virgin Flying Club miles for Air France and KLM flights, I thought it was worth highlighting it again.
The deal has also got more interesting. Whilst savings rates have dropped over the past 12 months, Virgin Money has not reduced the earnings rate on this account.
What does the Virgin Money and Virgin Atlantic partnership cover?
There are now a range of Virgin Money products which earn Flying Club miles:
we have covered the two new Virgin Atlantic credit cards in depth as they are exceptionally good – read our overview here. Until 28th February, you will earn 25,000 miles as a sign-up bonus with the Reward+ Mastercard.
the current life insurance deal is also decent with a bonus of up to 25,000 Flying Club miles
Earning Virgin Atlantic miles with a savings account
Today we want to look again at the Virgin Money Savings Account. I was always intrigued by the ability of earning miles as you save rather than as you spend.
The Virgin Atlantic 1 year Flying Club Savings Account was launched in June 2018, but the earning rate wasn’t that great initially. Virgin Money relaunched the offer last year with a far better underlying interest rate. It then held the rate as other banks cut their best deals, making their deal even better in comparison.
Full details are on the Virgin Money website here.
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 Atlantic Flying Club miles for every £1,000 you save.
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 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
In general, I would be a buyer of Virgin Atlantic 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.
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 no better than 1.1% (Skipton). On this basis, the Virgin Money account – at 1.36% – is competitive. 1.36% is also on a par with the best instant access account, which is Marcus (Goldman Sachs) at 1.35%.
You can, of course, get higher rates from lesser known financial institutions which also have FSCS protection up to £85,000.
The higher you value a Virgin Flying Club mile, the better this deal looks
Let’s imagine that you’d be willing to pay 1.25p for a Flying Club mile, because you regularly redeem in a particular way which gets you a higher valuation than usual.
On this basis, you’d be getting the equivalent of (1,600 miles per £1000 x 1.25p per mile) 2.0% interest on your money, which is exceptionally high in the current market.
If you would pay 1p for a Flying Club mile, which is arguably more realistic, you’re getting the equivalent of 1.6% interest on your money. Good luck finding an account to beat that.
One point to remember is that you won’t receive your miles for a year. 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.
Get access to Virgin Money lounges
You will also get unlimited free access to all Virgin Money lounges if you open a Virgin Money Savings Account. To find your nearest lounge visit the Virgin Money website. You can also get this benefit by taking out the free Virgin Atlantic credit card, however, so don’t put too much value on it.
This product originally launched with a whimper, as the mileage return was too low. Virgin Money then increased the mileage rate, making it look OK. Other bank have now cut their own savings rates and – finally – the Virgin Money 1 Year Flying Club Savings Account is worth considering.
How to earn Virgin Points from UK credit cards (November 2020)
As a reminder, there are various ways of earning Virgin Points from UK credit cards. Many cards also have generous sign-up bonuses!
As well as the two official Virgin Atlantic credit cards (see here, one has a bonus of 15,000 Points), you can also earn from various American Express cards – and these have sign-up bonuses too.
(Want to earn more Virgin Points? 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.)