Chip to charge for autosaving in October - but free alternatives are available
Savings app Chip will start charging customers using its standard free account for certain features, including its popular 'auto-saving' function, from 12 October. Below we explain what's happening and alternative accounts to consider.
The Chip app, which launched in 2016, has previously been one of our top picks for autosaving, using an algorithm to calculate how much users can save and setting money aside automatically. The idea is that you start building up savings without really noticing the cash is going. Chip then moves this money into savings accounts run by other providers, such as Allica Bank and OakNorth.
But while it'll still be free to have a standard Chip account and move money manually, from 12 October charges will be introduced for certain features, including autosaving.
For alternatives, see below, as well as our Autosaving Apps and Top Savings guides. Just bear in mind that while Chase Bank and the savings accounts mentioned below are covered by the Financial Services Compensation Scheme's up to £85,000 per institution limit - the rules somewhat differ for Chip and Plum, so ensure you check these first.
Chip is introducing fees for autosaving from 12 October
There’s currently no fee to save using Chip’s standard plan, and this is set to stay the same. However, on 12 October new charges for certain optional features will take force:
- Using 'auto-save' will cost 45p each time. There's no fee for this service at present. As outlined above, with the auto-save function, Chip uses an algorithm to see how much you can afford to save and moves it into a savings account automatically.
- 'Recurring saves' will cost 25p each time. There's no fee for this service at present. This feature allows you to automatically deposit money into any cash savings account, or investment fund, on the day that suits you, either, weekly, fortnightly or monthly. This includes the 'Payday Put Away' function, which sets aside a regular amount into your savings every time you get paid.
In addition, from 12 October:
- You'll be charged £1 per withdrawal if you make more than two withdrawals in a 28-day period. This applies to all accounts, including easy-access savings accounts.
Alternatives if you're keen for an account that helps you to save
Chip savers are likely to use it it because its automated process makes it easy to get into the saving habit. But there are other apps out there that do a similar job for free:
- Plum – auto-saving and round-ups. Plum offers a similar autosave feature to Chip, plus the option to round-up purchases made from your linked bank account to the nearest pound. It then saves the difference (for example, 80p on a £2.20 spend), which it collects weekly. Your savings are initially held in your Plum account paying no interest, but you can move them to its easy-access 'interest pocket' at 0.5% or out of the app into a top savings account for higher rates.
- Chase – 5% on round-ups, plus 1% cashback on spending for a year. Chase Bank doesn't offer autosaving but it does include a similar 'round-up' option to Plum - though you need to spend on Chase's debit card to benefit from this. It moves any round-up amount into an easy-access account paying 5% AER, after which the round-up balance is moved to another account (of your choice) meaning your round-ups start again from scratch for another year. You also get 1% cashback on almost all spending for a year.
Ditch auto-saving to get better savings rates
If you're willing to keep a close eye on your savings, you may be better off ditching autosaving altogether and stashing your cash in a traditional savings account which pays interest instead.
Currently, the top interest rate for an easy-access saver is offered by Zopa at 1.81% AER (minimum £1 deposit). This outperforms the 1.1% offered by Chip through Allica Bank for its easy-access account.
Chip also has the option of a 90-day notice account via OakNorth which offers 2.02% AER. However, the current top rate for 90-day notice accounts is with DF Capital which offers 2.3% AER (minimum £1,000 deposit).
See our Top Savings Accounts guide for further alternatives and the latest best buys.