With automatic saves, can this app help you put money away?
FinTech – or financial technology – is big businesses. Every week a new app launches which promises to revolutionise your finances. And every month or so another one disappears (Yboo, OneDox and more).
One that’s been around for a good few years now is Chip, and I’ve been a big fan for a long time. But we’ve seen the initial interest rate offering cut and the addition of a fee which have dented its appeal.
So is it worth getting or sticking with? Here’s my review of how Chip works.
Click this link for my review of the Chip +1 savings app, and a promo code to get 1.25% interest.
What is Chip?
Chip is an automated saving app for your phone or tablet. It analyses your finances and works out how much you can afford to save – and then does it for you by moving the money to a separate account.
It also offers a savings rate of 1.25% on up to £5,000. More on this in my separate review of this Chip+1 account.
How does the Chip app work?
I really love the “big idea” behind Chip. With automated savings the app analyses your spending habits, and based on what goes in and out of your account (along with general data about all it’s users) 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.
How do you set up Chip?
To start you must have a smartphone. Once you’ve downloaded the app and signed up 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 liberal use of emoticons (it’s aimed primarily at millennials, though anyone can use it).
It’s actually quite easy to set up and connect to your bank thanks to Open Banking. You scan your bank card (Debit card only – not credit cards), then click through to authorize permissions via your banking app. The banks will do this differently but I found it took just a few seconds.
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.
There is an option to talk to a real person if you need to and they can be quite fast at responding.
How much does Chip cost?
In December 2020 Chip totally changed the fee structure (the third change in six months).
You’ll now pay a monthly £1.50 fee if you use the AI features of the app.
So if you let Chip save for you automatically – which lets face it is the main point – then you will pay.
If you go for the free version – ChipLite – you won’t have access to any of the automated savings features.
How does Chip help you save?
As mentioned, this is the main feature of Chip where money is taken every few days. In theory, you shouldn’t really notice that the money has gone.
You have until 3pm to choose to stop this payment if you wish. If you’re happy with the suggested amount you don’t need do anything and the money will automatically be sent to your Chip account.
I’m always encouraging you to set up a standing order to move money to a savings account just after payday. This means you will always put aside the amount you know you can afford early on – and not “accidentally” spend it without realising.
This feature does it for you, but personally I’d still have a standing order in place and move that cash to the account which offers the best interest rate.
You can also add extra cash in at any time.
Other saving features
You can enter a target in name, date and amount to help motivate you to keep saving. You can have as many as you want, and allocate how much of your autosaves goes to each goal.
I’m not a fan of this feature which allows you to move money from your overdraft into Chip. If you do this you’ll likely end up paying huge overdraft fees. Personally I’d avoid activating it.
This is a handy cap you can put so that Chip won’t every take money out of your connected bank account past a certain balance. This can ensure you don’t ever go overdrawn or not have enough cash for other payments.
The more you save without cancelling a transfer the longer your savings streak will be, and the Chip blog promises a reward coming at some point for those who keep saving. The feature will also help you predict your future savings pot if you carry on putting away the same amount.
How often does Chip save money?
By default Chip will suggest savings for you every couple of days. You can pause auto-saves for a week, two weeks or a custom date up to three months away.
How much can you save with Chip?
Chip says the average is £20. There are five levels of auto-saves, with one being the lowest. By default, you’re at level 3, but it’s easy to switch between them in the app.
Manual saves used to be limited at £100 every 24 hours, and capped at just six times a month. However, it looks like this restriction has been limited and you can save as much as you want.
You’re limited to three saves a day in total, but that can be three manual saves, two manual and potentially even one auto-save, or one manual, one auto-save and one payday save.
There’s also an overall cap of £10,000 that can be held in your Chip account.
How much interest can you earn?
When Chip started it offered up to 5%, which was a huge plus for me. It was a little complicated as you needed to refer friends to get the top rate, and it only lasted for a year, but various promo codes could help you get at least 3% for 12 months.
However, this ended in June 2019, and was replaced in late 2020 by the Chip+1 account. this offers 1.25% on savings of up to £5,000 – but it’s not as simple as it seems.
For a start it’s a separate account to where your autosaves go! Check out my full review of Chip+1 for all the details.
Is Chip safe?
This all comes down to how comfortable you feel with sharing your data. The open banking connection gives Chip access to the details in your account, but there is bank-level encryption security put in place.
In terms of accessing your money, it can only move money between your Chip account and your connected bank account.
Is your money safe in Chip?
The short answer is yes. The longer answer is more complicated.
If you put the money in one of the Interest Accounts you then get FSCS (Financial Services Compensation Scheme) protection. This mean if the bank goes bust the government guarantees up to £85,000. Great.
If it’s just in the standard Chip account, this is put in something known as an e-money account with another bank (in Chip’s case it’s Barclays). So if Chip goes under, your money is still safe, but if Barclays was to go bust there’s no FSCS protection.
How do you withdraw your money?
It’s easy to withdraw your money, though it isn’t instant. Click withdraw before 5pm and you’ll get it the same working day. Do it after 5pm and it’ll be the next working days. The money will be moved to your connected bank account.
It’s an 11am cut-off for Interest Accounts for next day withdrawal – which means a two-day wait if you do this after 11am.
Changing your bank
You can only link one bank account to Chip and it’s a bit of a pain to change it. You just need to go into the live chat and ask them to cancel the connection to your current bank. But doing this will mean any money you have saved will be sent back to the initial account and you’ll have to start again
Chip promo codes
Since Chip started there have been a few different promo codes. First you could get up to 5% interest with a code, and then in 2019 and early 2020 there was a £10 bonus for signing up.
Access to 1.25% interest
The ongoing offer (which started in December 2020) gives you 1.25% interest on savings up to £5,000. You’ll need the code BCLEVER21 when you sign up. Read my full review of Chip +1 here.
I’m a fan of the auto-savings feature. It can be a great way to boost your savings without any effort.
However, I’m not a fan of the new fees in order to use this feature. I get they need to generate income, but you can still get this option elsewhere for free.
You could look to a similar service from Plum, or use top-up features from the likes of Nationwide, Starling and Lloyds. Plus don’t forget you can set up that standing order just after payday too. Here’s more on the different ways to automate your savings.
And as a place to get interest, I’d go elsewhere too – at least for now. I’ll be keeping a keen eye on developments though to see what Chip can offer as time goes on.
Have you used Chip? Is it helping you save? Let me know in the comments below.