You could win £10 or £10k each month.
Savings and investing app Chip has a new account that offers the chance to win prizes rather than earn interest. They’re selling it as an alternative to Premium Bonds.
With interest rates on the rise elsewhere, 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%.
This is the latest offering, giving you the chance to win a prize rather than earn interest.
What can you win?
The prizes on offer to start are one “Grand Prize” of £10,000 and then 250 prizes of £10. Each entry into the draw (more on this below) can win a prize, so you could win multiple prizes. But of course you could also win nothing at all.
*Update 1/10/22 – For the November draw there are more prizes as follows:
- 1 grand prize of £10,000
- 50 prizes of £100 each
- 500 prizes of £25 each
- 250 prizes of £10 each
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. In mid-October Chip is changing the fee structure (again), but you can opt for the free tier of membership.
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 at least £100 saved in the account. For every £10 you have saved you get an entry into the next prize draw. So £100 would mean 10 entries.
The most you can add is £85,000, which is the most protected by the Financial Services Compensation Scheme (FSCS).
The amount of money you have in 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.
When I added some cash the app said it could take up to three working days for the money to reach the account. However, entry is marked from when you make the deposit, not when it reaches the account. So you can add money right up until the deadline.
You can add money from other Chip accounts, via a connected debit card or through Apple pay. Instant deposits from bank accounts are apparently coming later in the year.
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.
Be aware that from mid October, Chip will only allow two free withdrawals each calendar month month. After this it’s £1 each time. So just make sure you avoid this
Prize withdrawals aren’t instant either. You’ll have to wait an extra day for the prize to reach your connected bank account after the initial savings.
The good news though is there’s no tax due on any winnings you might get.
What about interest?
There’s no interest 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. However, at the time of writing, Yorkshire Building Society pays 2.5% on the first £5,000 saved, then 2%. If you have £1,000 saved with YBS, that’s a guaranteed £25 over a year. £5,000 would net you £125.
I’d imagine that it’s unlikely you’ll get close to those returns with Chip. A grand saved in Chip would give you 100 entries, £5k would provide 500. But since there are just 26 prize in total, you’d have to be incredibly lucky to match the returns elsewhere.
Can you hack the savings account?
I’ve read all the terms and conditions and it seems that there’s no commitment to keep your cash in the account after midnight on the first day of the month.
This could mean that you can add your cash right before month end, then withdraw it at the start of the next month into an interest-paying account, without impacting your entry to the draw. So you’ll earn interest most of the month, but have a chance of winning cash too.
Though withdrawals are instant, the only issue is you can’t take out money that’s not yet fully deposited. Since that takes up to three working days, you’ll need to also factor in weekends.
So let’s say you add £1,000 on Wednesday 28 September, you could potentially take it out on Saturday 1 October. If you then win a few days later, you can withdraw it as a second transaction.
Of course this is a brand new account so this might now work, but at the very least it’s worth a try.
A word of warning though. This clause in the terms does mean Chip has a “get out of jail free” card if they don’t like this way of entering:
“If the Promoter has grounds to suspect any entrant or third party of cheating, deception or fraudulent or unsportsman-like conduct of any kind (including, without limitation, manipulating the Competitions or any entry) or if the Promoter believes any Competition is being abused in any way, the Promoter reserves the right (in its sole discretion) to disqualify any entrant, entry or person it reasonably believes to be responsible for, or associated with, such activity and/or refuse to pay any Prize (as defined below)”.
It certainly gives them wiggle room if you were to win the top prize of £10k not to give it to you.
Conclusion: Is it a good place for your savings
Personally I’d not keep your cash in Chip’s Prize Saving Account for any long periods. Yes you might win a prize, but there are so few of them your chances are slim -even if not many people enter.
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.
However, I will give the temporary deposit hack mentioned above a go. If I don’t win, I’ve only forfeited a few pennies and pounds each year.