Virgin To Introduce Fee Accounts

Current account customers with Virgin Money will be charged a monthly fee when it launches its banking service at the beginning of 2011.

Instead of hitting consumers with high overdraft charges, the group plans to charge an up-front monthly fee for people to bank with it. There will be no requirement to deposit a minimum amount in an account each month.

Currently, the majority of bank accounts are free, but people are stung with high fees if they go overdrawn without permission. Virgin Money believe their plans will make its account more transparent and easier to understand.

The group stressed that it was still at an early stage of developing its current account, and had not yet decided exactly what the charge would be.

But it is thought it would be the first bank to charge a compulsory monthly fee, regardless of how much consumers deposit in the account.

Jayne-Anne Gadhia, chief executive of Virgin Money, told The Sunday Times: "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.

"We're definitely planning to charge for current accounts and be transparent about it."