You could win up to £10k each month.
Savings and investing app Chip offers a few savings accounts, including one that’s often at the top of the rate tables for easy access savings. But there’s also another that offers the chance to win prizes rather than earn interest.
They’re selling it as an alternative to Premium Bonds, so is it worth a punt? Here’s how it works and my analysis.
What is the Chip Prize Savings Account
Chip has a pretty decent history when it comes to savings accounts. There was the initial up to 5% account, followed later Chip+1 which paid a then market-leading 1.25% and now the Instant Access currently offers 3.71%.
This is the latest offering, giving you the chance to win a prize rather than earn interest. This means there’s no guarantee of a return on your savings, but there is a chance of winning more.
The good news is there’s no tax due on any winnings you might get. That might appeal to those who have gone over their personal savings allowance and see interest gained cut by tax payments.
What can you win?
The prizes on offer are one “Grand Prize” of £10,000 and then various smaller prizes. When it started in Autumn 2022, there were just 250 extra prizes of £10.
That’s continued to grow, and for May 2023 the number of prizes has doubled from April’s level of 1,301. so there’s now a total prizes fund value of £52,500 across 2,651 prizes. It’s broken down as follows:
- 1 grand prize of £10,000
- 50 prizes of £100 each
- 100 prizes of £50 each
- 500 prizes of £25 each
- 2,000 prizes of £10 each
And you could win more than one. Each entry into the draw (more on this below) can win a prize. But of course you could also win nothing at all.
How it works
Opening the account
First up, you need to have an account with Chip. This is app-only and quick to set up. As long as you don’t opt for the Chip X membership tier or turn on autosaving, it won’t cost you anything.
The savings account itself is actually with ClearBank – but that won’t make any difference to you as you open and manage it via the Chip app. You’ll have to agree to the terms and conditions. Once it’s set up, you’re good to start moving money into it.
You do need to be over 18 and a UK resident to open the account.
Entering the draw
To enter the Chip Prize Savings account you need to have an average balance of at least £100 saved in the account across the calendar month.
For every £10 (on average) you have saved you get an entry into the next prize draw. So a £100 average balance would mean 10 entries.
The most you can add is £85,000, which is the most protected by the Financial Services Compensation Scheme (FSCS). Incidentally the money is actually held with ClearBank, so make sure you don’t have other savings held with them that could take you over that protection limit.
The average balance for the account at 11:59pm on the last day of the month dictates how many entries you’ll have in the draw the next month.
You can add money from other Chip accounts, via a connected debit card, through Apple pay or instant deposits from bank accounts. The card and current account need to be from the same bank.
There’s no charge to enter the draw – though as I’ll come back to later there will may be fees for withdrawing your money.
How the winners are chosen
The draw is monthly, but it’s not right at the start of the month. It’ll take place within a week, so by the 7 of each month at the latest.
It’s all random, and how many entries you have won’t impact your chances of winning a prize, though obviously the more entries you have the more likely it is you’ll win something simpy because you have more entries.
Claiming your prizes
If you’re lucky enough to win, you’ll be notified by email. The money will be paid into your Prize Savings Account within seven working days of the draw. However, it won’t be covered by the FSCS protection and it won’t count towards entries in future draws.
To withdraw the cash you’ll need to withdraw your entire balance. So if you have saved £1,000 and win £10,000, you’ll need to take out the whole £11,000. That’s less of a chore for large amounts, but it’s a pain if you just want to get a £10 prize out.
Prize withdrawals should take just a few minutes, but allow for up to two hours.
How it compares to other savings accounts?
There’s no interest paid with this account, so if you don’t win a prize you’ll earn nothing at all.
I’d love to compare your chances to the best buy instant access accounts, but Chip doesn’t offer a prize rate.
For interest paying accounts, at the time of writing, Chip’s Instant Access account itself is at the top, with a 3.71% rate. So for £1,000 saved for a year you’d earn £37.10.
I’d imagine that it’s unlikely you’ll get close to those returns with Chip. A grand saved in Chip’s Prize Draw account (on average) would give you 100 entries. So you’d need to win four lots of £10, two lots of £25 or one lot of £50 (or a mix) to do better.
Conclusion: Is it a good place for your savings
Personally I’d not keep cash in Chip’s Prize Saving Account for any long periods. Yes you might win some money, but despite a large increase in how many prizes there are, your chances are slim. And if you do win it’ll likely be just a tenner.
I think it’s better to get the highest possible rate you can elsewhere – here’s my list of the top paying accounts. These will give guaranteed money paid on your savings every month.
And if you’re in a situation where you’re seeing the real returns from savings hit by tax, I’d look first at Premium Bonds. Though there’s still a good chance you won’t win with those, there is a published prize rate that gives you an indication of what you could get.