While many of us may have ‘friends’ on Facebook we haven’t spoken to in years, it’s unlikely you’re connected with a robot – though with the new wave of ‘chatbot’ tech, this looks set to change.
Which brings us onto Plum, a new-ish chatbot. A chatbot is a computer program you can interact with online, and this one, Plum, automates your saving – all within its home of Facebook Messenger.
It works in much the same way as Chip, another automatic savings tool which pays up to 5% interest. But instead of sitting in its own app, Plum joins the 34,000+ bots that work in Facebook.
The main aim of Plum is to get people saving without thinking about it – it squirrels away small amounts that its algorithm decides you can afford every few days, based on your spending. And though it doesn’t usually pay interest (more on that later), we’ve blagged a deal to get 1.5% fixed interest per year for 18 months from account opening, on the savings that it automatically makes for you in the first six months.
Plus, it’s recently announced a partnership with peer-to-peer lender Ratesetter, meaning you can move money saved with Plum into a Ratesetter account (currently at 2.8% annual interest) – though it’s important to beware of the risks involved with peer-to-peer lending. See our Peer-to-Peer guide for more.
Do be aware too that any money you save with Plum isn’t covered by the Financial Services Compensation Scheme (read on for more on this).
How does it work?
Once you sign up to Plum*, you need to connect it to your Facebook Messenger. Then, you link it to your current account, giving it read-only access so it can see your transactions. Plum currently works with 14 providers, including Santander, HSBC, Barclays and Lloyds Banking Group.
It uses its algorithm to analyse your spending and build a ‘unique saver profile’ for you, and then – through a direct debit – siphons off a few pounds every three to four days into your Plum savings account. You can then choose to keep it there, or invest the money with Ratesetter.
We asked one of Plum’s founders why they’d decided to build it in Facebook Messenger as opposed to in its own app, and they told us that they wanted the saving to be a background process, blending into your everyday life, instead of requiring you to download and check a separate app.
They also want to generate more conversation around saving money – something we at MoneySavingExpert.com approve of – and hope that by housing it in Messenger it can spark discussion. Future plans also include moving it to more social platforms.
Will Plum pay me any interest?
Usually, no. But sign up via our link and you’ll get 1.5% fixed interest per year for 18 months from account opening on any money that Plum saves automatically for you in the first six months. Note you won’t get any interest on money moved manually into your Plum account. The interest is calculated daily, on any automatically saved money that remains in your Plum account, and is paid every three months.
It’s possible to get more interest elsewhere, yet this is a good option if you want an app that saves automatically for you and either don’t want to get Chip, or want to try a Facebook bot (as I explained in a previous blog, Chip’s GIF-filled chat could grate on some, and Plum seems a bit less excitable).
Plus, with its new partnership with Ratesetter, if you want to dip your toe into the world of peer-to-peer lending, you can choose to move some or all of the cash that Plum saves for you into a Ratesetter rolling market account, which currently pays an annual 2.8%.
Is my money safe?
Plum deposits your money into a wallet operated by MangoPay, an EU-regulated financial institution. Any money you save with Plum is held in a Barclays instant-access savings account. This means that if Plum were to go bust, you’d be able to recover your money from Barclays.
However, if Barclays were to go under, your money may NOT be protected by the Financial Services Compensation Scheme, so you could lose your cash – you need to decide if you’re happy to take the risk.
It’s also important to note the risks involved if you decide to go down the Ratesetter route with Plum – returns aren’t guaranteed, and you could lose your cash – your money’s lent out to individuals, and you’re dependent on them paying it back, though there is a provision fund in place to minimise risks. Ratesetter says no one’s ever lost out, but of course if the economy takes a downturn, it could mean more people defaulting. For more on this, see our Peer-to-Peer Lending guide.
How can I get better returns on my savings?
While the automatic nature of Plum makes it an attractive option for some, if you can actively engage in saving it’s possible to earn a decent sum – high interest current accounts and bank-linked regular savings are still the best options for many, paying up to 5%.
So, think about the type of saver you are; if you’re a savvy MoneySaver who chases the best rates then they might not be for you, but if you struggle to put anything away each month, an automatic savings app might just be the nudge you need.