Banking

Could this simple trick grab you an easy access best buy savings rate?

Savers looking to maximise their returns may be tempted in by an app offering a ‘best buy’ easy-access rate, but the devil is in the detail. 

Digital savings platform, Chip, has launched a new market leading rate, powered by Allica Bank, offering 0.7 per cent.

This rate offered exclusively to Chip customers comes with Financial Services Compensation Scheme protection, up to £85,000 per person and allows savers to deposit a maximum of £30,000 into the account.

However, to open the account, customers need to have a paid-for subscription which costs a minimum of £1.50 per month, eating into the rate.  

Chip, the digital savings app, has launched a new marketing-leading savings account offering 0.70 per cent interest.

Being an easy-access account, savers can withdraw their money whenever they like without paying a penalty.

James Blower said: ‘I think this is a good offering from Chip, and a big improvement on their Chip+1 offering which was limited to just £5,000 and was paying a bonus rather than interest.

‘It’s certainly something that savers happy with saving using mobile apps should consider.’

What is Chip?

Chip is an automatic savings and investment app designed with the intention of helping its customers to save and invest without having to even think about it.

Similar to Moneybox and Plum, Chip uses artificial intelligence technology linked to your bank account via open banking to calculate how much its customers can afford to save based on their spending habits.

It then transfers that money from their current account to their Chip account – automatically whilst not interfering with a person’s normal day-to-day spending habits.

Customers can increase or decrease the amount Chip puts aside by tweaking their saving level on the app, which determines how fast or slow they want to save.

Chip can apparently adapt to a person overspending or earning irregular income and can adjust the savings amounts accordingly.

It offers a host of features – it analyses your spending habits, helps set savings goals, and can automatically set a regular amount to save every time you get paid by your employer.

Its easy-access account is not yet set up to accommodate the autosaving feature but Chip claims this should be available soon.

This account is only available on the ChipAI and ChipX membership plans. ChipAI is £1.50 every 28 days and ChipX is £3 every 28 days

This account is only available on the ChipAI and ChipX membership plans. ChipAI is £1.50 every 28 days and ChipX is £3 every 28 days

What’s the catch?

To be eligible for the easy-access account you’ll have to become a fee paying customer of Chip.

This deal is only available to savers with either a ChipAI or ChipX membership plan.

A ChipAI account costs £1.50 every 28 days whilst ChipX customers are charged £3 every 28 days.

This means, for example, someone saving £10,000 via the Chip AI account would see their £70 return drop to £52 over a year – effectively rendering the rate 0.52 per cent.

However, the account also comes with a host of features that Chip would argue justify the monthly cost and go beyond what one might get from another savings platform or provider.

The ChipAI account for example, provides access to BlackRock investment funds and unlimited use of its automatic savings AI and support. 

How does its easy-access account compare?

Tandem Bank pays 0.65 per cent, while Aldermore is offering a 0.6 per cent rate to savers. 

The average easy-access account pays just 0.18 per cent interest, according to Moneyfacts whilst many large banks are offering as little as 0.01 per cent to savers.

Savers can deposit up to £30,000 maximum into the account.

Savers can deposit up to £30,000 maximum into the account.

Savings platform, Flagstone, which enables customers to open multiple savings accounts with multiple providers via its platform, also offers a superior rate of 0.8 per cent.

Although once again savers would be wise to check out Flagstone’s fees and restrictions.

It requires a minimum £50,000 deposit to start with and charges a one-off set-up fee of £150 for new clients depositing between £50,000 and £249,999. For those depositing more than that the charge is even higher.

There is also an annual management charge of between 0.15 per cent and 0.25 per cent dependent upon the value of deposits held by a customer on the platform, which will eat into savers returns.

Another savings platform, Raisin currently offers a £50 welcome bonus to any new customer who funds their first savings account with £10,000 or more.

Although its best easy-access account pays just 0.27 per cent, coupled with the welcome bonus, someone stashing away £10,000 could earn £77 in the first year – an effective return of 0.77 per cent, superior to the Chip rate. 

Is it right for you?

Much depends on how you rate Chip’s overall package.

If you need help saving or investing and like the AI based setup whilst also being able to monitor what’s going on from an app, then it might be worthwhile.

Just be aware that the monthly account fees will eat into your return if it’s just the easy-access account you’re after.

Blower said: ‘Chip allows up to £30,000 to be saved which is a decent amount and means it might be more suitable than Tandem’s deal for those looking to save amounts up to that level.

‘But those with £50,000 or more might be tempted by Flagstone, although they should look at the fees which, in reality, may make Tandem still the better option.’

There are further restrictions to be aware of – the biggest single deposit one can make in one go is £5,000, although savers can make up to five deposits in a day.

Savers who don’t feel comfortable with managing their money via an app may also find solace elsewhere.

‘Savers who don’t use mobile apps should look at Aldermore’s Double Access account paying 0.60 per cent or Investec’s easy access account paying 0.58 per cent which has no restrictions,’ advises Blower.

Should savers act now or wait for a better deal?  

‘Savers interested in the Chip offering should move quickly – Allica, who are providing the account, had only £104million of deposits as of 31 December 2020,’ said Blower.

‘They are not big enough to take on huge volumes from this account so I’d be surprised if it is available for long.

‘It is still likely to fill up in a few weeks so is worth securing sooner rather than later as I doubt 0.7 per cent will be beaten in the market in the next month or two.’

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Most Related Links :
todayuknews Governmental News Finance News

Source link

Back to top button