How to beat normal savings by trading interest for air miles

How does the account work?

Like a traditional fixed-rate bond, you lock away your cash for a year in exchange for a guaranteed return at the end of the term. But instead of cash interest, you get 1,600 miles for every £1,000 saved.

To open an account you'll need a Virgin Atlantic Flying Club membership number, though if you aren't already a member you can join the club for free.

No withdrawals are allowed during the term. At the end of 12 months, any earned miles will be credited to your Flying Club account within five working days of the maturity date. Following this, the account will no longer earn you any miles and you'll be able to move your cash into another account.

What else can I get with Flying Club miles?

It's also possible to redeem Virgin Atlantic air miles on flights with its partner airlines, which can offer decent value:

• Fly economy from New York City to Los Angeles for 25,000 miles + £9 in fees. Virgin partners with Delta Air Lines for domestic US flights. Depending on your itinerary, booking with miles through Virgin can work out cheaper than paying in cash. For example, we found a return flight for a week in September for 25,000 miles + £9 in fees, while the cheapest Delta flight for the same dates would cost £262 if you paid in cash – a £3 saving. (You'd need £15,625 in savings with Virgin to earn 25,000 miles.)
  
  
• Domestic flights in Japan for 15,000 miles. If you're planning a trip across Japan, domestic flights with All Nippon Airways can be booked through Virgin for 15,000 miles regardless of the distance. (You'd need £9,375 in savings with Virgin to earn this amount of miles.) While of course this isn't as environmentally friendly as taking the Shinkansen (sometimes called the 'bullet train'), it can be quicker. For example, flying from Tokyo Haneda to Sapporo takes around one and a half hours, compared to around seven hours on the train.

You can also redeem Virgin air miles for cabin upgrades or discounts on Virgin Atlantic flights and reward flights on other partner airlines (including Air France, Air New Zealand and KLM), as well as at some hotel chains (eg, Hilton and IHG). Of course, the value you get from each of these will vary, so check before you redeem.

What other ways are there to earn Virgin air miles?

If you don't want to lock away your cash for a year, one other option is a reward credit card:

• The fee-free Virgin Atlantic Reward credit card (eligibility calc / apply*) gives 5,000 bonus Virgin Flying Club miles if you make a purchase of any amount within 90 days. It also gives 0.75 miles for every £1 spent on the card. Repay IN FULL to avoid 22.9% rep APR (22.9% annual interest on purchases).
• The £160 a year Reward+ card (eligibility calc / apply*) offers a higher 15,000 bonus miles on your first purchase within 90 days, and gives double the amount of ongoing miles – 1.5 for every £1 spent. Rep APR is 63.9% (incl fee), so repay IN FULL (there's 22.9% annual interest on purchases).

For more on these cards and their rewards, plus information about other airline reward cards, see our Airline Credit Cards guide.