Three new financial products now offerred by Virgin Money, in conjunction with Citibank Australia, include an online savings account, a travel rewards credit card tied to the airline Virgin Blue, and another credit card with no annual fee.

The online savings account, called Virgin Saver, pays a variable interest rate of 6.75% p.a. for the first four months the account is open. After that introductory time, the rate falls to 5.35%.

The Virgin Flyer credit card includes a rewards scheme tied to Virgin Blue as well as various discounts, while a second card promises no annual fee, ever.

Virgin Money’s relationship with Citibank Australia means funds deposited with the Virgin Saver account are guaranteed by the federal government.

Matt Baxby, managing director for Virgin Money, wants to reduce the major banks’ market share.

“Eighty per cent of the savings market is controlled by the big four,” said Mr. Baxby. “I think this is a fantastic opportunity for us to take some of that share away from the majors.”

Sir Richard Branson, the colourful entrepreneur behind the Virgin name, is just as enthusiastic.

“We’ve come to Australia to give the banks a run for their money,” said Sir Richard. “There is only four banks now in Australia. They’re very big banks and they’ve effectively squeezed out all the small guys.”

In time, Virgin Money will offer mortgages and transaction accounts. But the timeline for these financial products hasn’t yet been established.

“Making the products we launched today work is the priority,” said Mr. Baxby during the original announcement.

Increasing competition across the banking industry is a good thing, said Frank Zumbo, associate professor of competition and consumer law with the University of New South Wales.

“Virgin Money’s new credit cards and online savings account represent a vital step forward in ensuring effective competition in (Australia’s) financial sector,” he said. “We particularly look forward to Virgin Money offering mortgage products, as that’s where consumers need to see real competition.”

Source: http://news.smh.com.au/