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With interest rates of up to 5%, can this app help you save?

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FinTech – or financial technology – is big businesses. Every week a new app launches which promises to revolutionise your finances. Some of the innovations are quite exciting, others I’m not so sure about. So I’m going to be trying out a different one every week or so and sharing my experiences. First up, Chip.

The big attraction for me is that Chip promises up to 5% interest. With rates so poor at the moment it seems too good to be true. But Chip is primarily designed to take the effort out of saving by automating it. So does it work? I’ve been using it for over a year, so I’ve got a good sense of if it delivers.

Oh – and I’ve a special deal to start you off with 3% interest for the first year.

How much interest can you earn?

Though the 5% rate is fantastic, you don’t start with it. The basic interest rate on Chip is 0%. Not good.

To get any return you need to get friends to join up. You boost the rate by 1% every time they use your unique referral code. And in turn they’ll also get 1%. You can keep referring people until you reach 5%, though you can only add one promo code to your account. Every 1% you add to your rate lasts for 12 months from when you get it. Interest is calculated weekly and paid quarterly (so every 13 weeks).

Start with 3% interest

To get you started I’ve negotiated a deal where you can start with 3% rather than the standard 1%. This rate will last for one year (more on how this works below). Use the code CLEVER3 to get your 3% bonus. Then you only need to refer two friends and to get your 1%.

How much can you save with Chip?

The most you can send in 24 hours is £100, and you can only do this six times a month – making£600 the overall total you can save in this period.

There’s also an overall cap of £10,000. But it’ll take a while to get there. You’d need to deposit the full £600 every month for close to 17 months, and that’s not including any interest you’ve received. Once you reach £10k you can still get interest on that total, but you can’t add any more money.

Can Chip help you save?

The interest rate is great, but the “big idea” behind Chip is automated savings. The app will analyse your spending habits, and based on what goes in and out of your account Chip will suggest an amount you can afford to save each week. The amount will vary depending on how much money you have in your account and how often you spend it. It could be just a few quid, or a decent chunk.

You have until 4pm to choose to stop this payment if you wish. If you’re happy with the suggested amount you don’t need to anything and the money will automatically be sent to your Chip account. In theory, you shouldn’t really notice that the money has gone.

How the Chip app works

Once you’ve downloaded the app and signed up with a promo code, you’ll start a chat with Chip. You’re talking to a “robot” rather than a person, and the conversation is full of gifs of dancing parrots or minions, with a liberal use of emoticons (it’s aimed primarily at millennials, though anyone can use it).

Chip savings app sign up

The Chip app says hello and gets you started

It’s actually not as weird as it seems and it’s quite easy to set up and connect to your bank – though you need to remember your log in details!

Once set up make sure you turn notifications on. This will allow the app to alert you when it wants to start saving for you.

The automated savings suggested by Chip. You’ve got until 4pm to stop. You can add more at anytime.

There is an option to talk to a real person if you need to, and you can increase or decrease the level of saving, set savings goals and even pause saving for up to 90-days.

It’s easy to withdraw your money, though it isn’t instant. So it’s worth thinking about this a few days ahead of any big expenses.

Banks you can link to Chip

Not all banks will work with Chip so you need to have an account with one of the following:

  • Barclays
  • Co-operative Bank
  • First Direct
  • Halifax
  • HSBC
  • Lloyds
  • Metro Bank
  • NatWest
  • Nationwide
  • RBS
  • Santander
  • TSB

My verdict

I’m a fan. If you can get friends to sign up to at least 3% you’re getting one of the best savings rates available.

I was concerned at the start that my savings wouldn’t be protected if the startup was to shut down. But the money is actually held in a Barclays savings account in your name, so if Chip goes bust, you can claim your cash from Barclays. However Chip doesn’t have FCSC protection (yet) so you’d lose the money if Barclays went under. It’s unlikely, but a something to consider.

Security should be ok too. Though you give Chip access to your account this is read-only. The money transfers are actually done via a Direct Debit.

Now I’m quite good at saving spare money, with cash moving automatically each month to one of my regular savings accounts. But I really like how Chip simply moves money for you. I can see how that would be useful for people who struggle to start saving.

It’s obviously worth keeping an eye on the transfers and the bank balance of your account. But I’ve found it does take the effort out of saving and it’s a pretty decent way to build up a separate pot

It’s definitely worth downloading – and remember use the referral code CLEVER3 will give you a 3% to get you started.

> Download Chip on iTunes

> Download Chip on Google Play

Have you used Chip? Is it helping you save? Let me know in the comments below.

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