Chip axes +1 account for existing users: Where to move your cash

From December you’ll stop earning 1.25% on savings.

I’m surprised it’s taken so long, but this week savings app Chip confirmed the Chip+1 account will close next month.

Though the account only launched a year ago, they were closed to new customers in the summer. And now the 1.25% bonus will finish on 8 December.

Here’s what you need to know, and how to find the best place to move your money.

What’s happening to Chip+1 accounts?

On 8 December the bonus rate will end on all money held in a Chip+1 account. Any bonus due will be paid on that date, but nothing else will be added.

You also won’t be able to add any money to the account, either manually or via Chip’s AI auto-save algorithm, from 2 December 2021.

The accounts themselves won’t close, so if you leave the money there it’ll remain safe, though the interest or “bonus” rate will be 0%.

This could leave people with up to £10,000 no longer earning any money, so it makes sense to move your cash elsewhere.

Unless you choose to transfer your cash to another Chip account (more on this in a moment), you’ll need to withdraw your funds to the linked bank account. This could take one or two working days to come through.

Should you keep your money with Chip?

Chip wants you to move your Chip+1 account to its recently launched instant savings account run in collaboration with Allica Bank.

This pays 0.7%, which is better than the rest of the easy-access accounts available – until you take into account that Chip requires you to pay a fee every four weeks.

This £1.50 charge adds up to £19.50 over a year, and when this is taken into account, you need more than £2,786 saved to generate enough interest to cover the fee!

It’s only massive balances (approaching the account’s £30,000 limit) that make more than the next best account. Personally I wouldn’t bother doing this unless there’s a promotion to remove the fee. Here’s my full review.

However, it does look like there’s been a change with the account and now ChipLite (the free tier) members can put £2,000 into the account and earn the interest.

So if you only have £2,000 in Chip+1 and have already taken advantage of some of the better-paying accounts listed below, there’s no harm moving it over in December.

If you do want to do this you need to let Chip know you’re happy for this to happen. This can be done in the app. They’ll move the money across automatically.

Chip will also be offering other savings accounts soon, so I’ll report back on these when we know more.

Where to move your money

You’ve got a few options for your cash. Depending on the balance in your Chip+1 account and any other accounts you already have, you might be able to beat 1.25% interest on some savings. Though it’s more likely you’ll earn less.

Here are your options and my thoughts on each one as of 9 November 2021.

Claro – 2%

The highest-paying option for any balance up to £3,000 is the Claro app, where you’ll earn 2%. However this app is on iOS (Apple) only. And it’s only free for the first year. Still it beats all other accounts right now. Read more about it here.

Virgin Money M Plus current account – 2.02%

You can only earn the interest on up to £1,000 held with this account, though you can open more than one. I’d hesitate to do this though as you will be credit checked on each application.

Since 2.02% on £1,000 works out as £20.20 over a year, I think it’s better to prioritise current accounts which pay more, either from monthly rewards or bank switching incentives. More on these here.

Still getting one account is definitely worth it as you can get 12 bottles of wine for switching in.

Premium Bonds – up to 1% prize rate

After the Claro and Virgin options, or if you don’t fancy multiple accounts, then putting it Premium Bonds could be worth it.

You’d want at least £5,000 here to beat easy access options (based on average luck) – though you’re not guaranteed to win any prizes. The maximum you can save here is £50,000. Here’s more on Premium Bonds.

Aldermore via Raisin – 0.86% and £50 bonus

This account is only going to work if you have the full £10,000 saved and are happy to lock it away for six months. If you do you’ll get 0.86% and a £50 bonus. After six months you can move the money to a different account. More here.

Club Lloyds – up to 0.78%

This current account will pay 0.6% on up to £3,999, then 1.5% for between £4k and £5k. If you have the full £5k in there it averages out at 0.78%. Plus you’ll get free cinema tickets or movie rentals. More on the account here.

Shawbrook Bank – 0.67%

This is the current best buy for easy-access accounts, offering a rate of 0.67% on balances of up to £85,000. These rates can change frequently so keep an eye on my best savings accounts guide for updates.

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