Artificial Intelligence (AI) transfers can help you build up your savings without noticing.
One of the biggest reasons people who try to save but fail is that they don’t prioritise the act of saving.
The money sits in their current account alongside all their other cash, making it hard to distinguish between what’s needed for bills and what is available for other spending.
The easy solution is to set up a standing order to move money to a separate account just after payday, but it’s possible to save even more thanks to fintech innovations.
Using rules and algorithms based on your spending habits, apps like Plum, Chip, Monzo and Starling can automate the transfer of cash from your current account into separate savings pots.
My favourite is the artificial intelligence or AI savings app. I’ve written about Chip before, but now it charges you to use this function, I wanted to take a look at the free alternative – Plum.
Here’s how it works and how you can get a bonus £5 for signing up (ends 28th February 2021).
What is Plum?
Plums describes itself as “The AI assistant that grows your money”. Though it offers a few extras, it’s primarily about helping you boost money for savings via automation.
It also acts as an entry level investment platform, but I won’t cover this element in the review.
How much does Plum cost?
There are three tiers with Plum, ranging from free to £2.99 a month.
- Basic – Free
- Plus – £1 a month
- Pro – £2.99 a month
Personally I’d stick with the free Basic option, and that’s what this review will focus on.
Setting up Plum
Plum is an app-only service, so you can’t take advantage of these if you don’t have a smart phone.
You connect Plum with your bank via Open Banking, giving the app read-only access to your account details. It’s a pretty simple process to connect as long as you already have your bank’s app installed on your phone. You need to reauthorise the connection every 90-days, which takes just a few clicks.
It’s possible to add more than one bank, though money will only be transferred from the account you designate. Unlike Chip you can change which bank this is whenever you want.
You can add credit cards too, but these won’t be used for the auto-savings features.
Plum currently works with the following banks:
- Danske Bank
- First Direct
- Bank of Scotland
- Ulster Bank
Autosaves with Plum
This is the big selling point with Plum for me. These features help you build that savings pot without actually doing anything. The money is transferred via a Direct Debit that is set up when you link your account.
To access these savings features you need to find the “Brain” option, which should appear on the home screen once you’ve connected to your bank.
The free tier of Plum has three ways to automatically move money from your bank to your Plum account:
- Round Ups
- Pay Days
The Pro version also has Rainy Days and 52-Week Challenge options but I’ll ignore these here. Mainly because you’ll have to pay, but also because if they’re of interest then they’re available alongside even more options for free via Monzo.
Here’s more on each of these savings rules:
This is my favourite of the three. As with Chip, an algorithm analyses your bank account, looking at your balance, spending and forthcoming regular payments in and out.
Based on this Plum works out how much you can afford to put aside. You can also adjust the “mood” of your savings level, from the default option. The lowest level “shy” will reduce that amount by half, while the top level “beast” increases it by 75%.
Money is moved once a week from your connected bank account to your Plum account. You can pause these transfers, or turn them off completely whenever you want.
Every time you make a purchase with a linked debit or credit card you can choose for the transaction to be rounded up to the nearest full pound, with the difference moved once a week to your pocket.
Be careful here though as these will continue even if you’re overdrawn, though you can switch this off in the app’s “brain” under ‘overdraft deposits’.
This is essentially a standing order which automatically moves money from your bank account when you get paid. You set the date and the amount.
Personally I’d set up an actual standing order for this and move your money to an account where you’ll earn the best interest right now. Or opt for a regular savings account.
Interest with Plum
The basic free version of Plum offers an “interest pocket” offering 0.25%.
You can beat this amount right now, but if you are using Plum then it makes sense to turn this feature on and put your cash there. You can choose where your money goes in the “brain” part of the app.
It’s easy-access though if you move money into one of these pockets then you have to give one-day notice to withdraw the cash.
The rate is variable, so it could change (in fact it dropped in late January). If that happens Plum will give you 14 days notice.
The Plus and Pro versions increases this to 0.4%, but you’ll likely spend more to upgrade than you’ll make with the increased interest rate. For example, £1,000 at 0.4% for a year earns you £4. That’s £1.50 more than the Basic account, but at a cost of £12 (Plus) or £35.88 (Pro).
Is your money safe?
Any money in your main Plum ‘Pocket’ is held in something called an E-Wallet, meaning it’s not covered by the Financial Services Compensation Scheme. If something was to go wrong, or if Plum went bust, your money should still be fine, as it’s actually held at Barclays. But if Barclays went under then you’d lose your money.
The savings accounts are with Investec Bank and these are protected by the FSCS. It’s only up to a total of £85,000 and that’s across all accounts you might have with Investec.
The app also offers a handful of extra features on the basic option.
The “Lost Money” tab is the only significant extra on the Basic Plum account. It’s meant to analyse your bills to highlight where you’re overspending. However, since it can only see your payments, it’s not really that useful.
And though it’ll send you through to a comparison site to help you find better deals, you can do that yourself without the aid of the app.
Other paid features
I don’t think any of these are worth upgrading for, but just so you know what is on offer
- Access to 0.4% interest account
- An extra Easy Access Interest pocket
- The ability to use Plum Investing
- Budgeting tools
- Unlimited pockets
- 52 week challenge and Rainy Day savings rules
You can get the AI algorithm savings feature with Chip and Cleo for a monthly fee. Tandem did offer this but has closed the feature.
Round up savings are more and more commonplace now, with Starling, Monzo, Nationwide, Lloyds and others offering this.
Monzo also offers you the option to automate the Pro savings features such as savings challenges, moving money if it rains and much more – and it won’t charge you for it (more on this here).
The “PayDay” feature is essentially a standing order which can be set up between any two bank accounts.
I’m a huge fan of auto-savings algorithms, and now that both Chip and Cleo charge for this, Plum is my top pick.
Link up your main current account and set the “brain” to the savings rules and levels that work for you, and you should slowly but surely see the amount saved grow.
Of course you’re not earning much right now with this account so you might want to move the money on a regular basis to one that pays a little more.
I’d stay clear of the paid versions – you don’t get enough extra for your money – and the other features don’t really offer much.
Plum promo code – free £5
When you sign up to Plum and connect to your bank via this link, you’ll get £5 credit added to your account. You need to have been actively using the app and made an automatic save in the first 30 days to get the credit. Ends 28th February 2021.