Chip is an automatic savings app founded in 2016 by Nick Ustinov and Simon Rabin. It is designed to help make saving money as easy as spending money. Over 250,000 people currently use Chip to save and there is a ChipMunk community page on Facebook where users can share their ideas for the app's improvement.
What is Chip and how does it work?
Chip is an app that uses artificial intelligence (AI) to calculate an affordable amount that can be saved automatically without affecting your usual day-to-day spending habits. Chip works by connecting to your bank account via Open Banking.
High Street banks that can be fully connected with Chip
- Bank of Scotland
- Co-operative Bank
- First Direct
- Marks & Spencer
- Starling Bank
- Ulster Bank
If your bank isn't on the above list then, unfortunately, you cannot connect to Chip at this time.
- Automatic saving - Chip uses AI to save automatically
- Spending analysis - By analysing your spending Chip can save amounts automatically
- Set savings goals - Track how well you are doing towards achieving your goals
- Easily withdraw your money - (Same day if requested before 5pm or next working day if requested after 5pm or on a weekend)
- Earn Interest - Earn interest on your money with Chip interest accounts
- FCA regulated - Chip is regulated and authorised by the Financial Conduct Authority
- Save streaks - see how long you have gone without missing an automated save and even predict how much you could have saved in a number of 'saves' time
- Payday Put Away - pay yourself first each payday by setting a regular amount to save every time you get paid
How to connect to Chip
Once you have downloaded Chip you will be asked to provide your name, D.O.B and address for your identity to be verified. Once verification has taken place (this only takes a few seconds) you are asked to connect you bank. Chip asks you to enter in your card details to validate your card. Your card will be charged £1.01 which will then be refunded within 3 days. You are now able to manually save money into your Chip account, use automatic saves and withdraw money.
To make the most of Chip's AI feature you will need to connect to your bank via Open Banking (you need to be using online banking to do this). With Open Banking you log in to your bank and authorise Chip to access your account on your behalf in order to analyse your spending. Connecting to Chip via Open Banking allows you to take full advantage of Chip's auto-saves feature, which is unavailable for those who only connect their account manually.
Currently, you can only connect one bank account to Chip however Chip says it is working to change this in the future. If you need to change your bank account you can do this by contacting someone through LiveChat via the Chip app. Chip will close down your current bank connection and will need to refund any money in your Chip account in order to satisfy money laundering regulations.
How does Chip analyse my spending?
Chip analyses your spending by looking at your spending history. It does this by checking your transaction data that it has access to via Open Banking.
If you are unable to connect via Open Banking and instead have to manually connect, Chip generates a suggested autosave amount via analysis collected from transaction data from its current users.
Chip autosaves money into your Chip account every 4 days. Chip may decide on some occasions that there is not enough money in your account and if this is the case, the autosave may not go ahead. There is an overdraft feature with Chip that allows you to continue to contribute to your savings pot even if your current account is in the red, however Chip will remind you that you are liable for any overdraft charges. Saving while in your overdraft can be turned on and off at any time. (Overdraft saving is only available with accounts that are 'fully connected' to Chip with Open Banking).
Chip advises it is important to keep the app up to date to avoid any issues with autosaving. You are able to adjust the savings level in your Chip account settings, and you can also turn off auto-saving at any given point. If you would like to manually deposit money into your Chip account, you can do so by clicking on 'save' and then selecting amount (up to a maximum of £100) You are limited to 6 manual saves per month.
Where is your money stored with Chip?
Chip automatically saves your money into a separate account within the banking app. Customers' money is currently saved in a Barclays ring-fenced account and is stored as e-money. You can have up to three savings goals with Chip (Chip recommends setting up short, medium and long term savings goals) and you can allocate a percentage of your autosave to go to each goal. This, however, is entirely up to you as the saver and you can save as much as you like to each goal or just one goal.
Can I earn interest on my savings?
Your money with a regular Chip account is saved as 'e-money' which means you cannot earn interest as it isn't an official savings account. However, from 21st July 2020 Chip is gradually introducing 'Interest Accounts'. It offers an interest rate of 0.30% AER via an easy-access savings account provided by a partner bank. Interest is accrued daily and users can withdraw the balance as soon as it is available. Those able to open an interest account with Chip can currently deposit up to a total of £5,000, either in one go or in smaller deposits.
Money held in a Chip interest account is FSCS protected. Chip is currently only offering one interest account but hopes to add more rates and providers soon.
Chip+1 savings account
Chip+1 is a savings account that boasts a return of 1.25%, however, it is reserved only for those who can successfully recruit a friend. In order to unlock the Chip+1 account, users will need to send a VIP code to a friend and only when that friend signs up will they be granted access. Chip says that it is able to offer the bonus as it is simply giving its advertising budget directly to its savers in return for recommending Chip to their friends. Chip says that its 'customers deserve it more than Facebook and Google do'.
It could be argued that the bonus on offer is nothing more than a 'referral fee' and it is worth keeping in mind that the bonus can be changed at any time with Chip saying 'As with any savings account with an additional bonus, this can be changed at our discretion. Should we choose to increase, reduce or stop offering this bonus, we’ll give you 30 days notice'.
Chip+1 savings account features
- Eligibility - Access only granted if a non Chip user signs up using your VIP code
- Return - 1.25% return is described as a 'bonus' rather than interest, which means it does not compound
- Payable - Bonus is payable not he balance every 12 weeks
- Limits - Bonus only payable on the first £5,000
- Protection - Money held in the Chip+1 account is protected up to £85,000 by the FSCS
Is Chip safe to use?
Chip is not covered by the Financial Services Compensation Scheme (FSCS) however it is an appointed representative of the e-money firm Prepaid Financial Services (PFS) Ltd, which is regulated by the Financial Conduct Authority (FCA). Chip says that PFS store your money in a ring-fenced Barclays account which therefore means it is not used for any trading activities.
Chip also boasts 128-bit encryption software to ensure your data is safe.
If you hold money in an interest account with Chip, your money is protected up to £85,000 by the FSCS.
How much does Chip cost?
Chip is free to use and download from the Apple and Google Play stores. If Chip manages to automatically save over £100 in 28 days using its AI setup, you will be charged £1. If it saves you less than £100 in 28 days then Chip is still free.
The £1.50 fee only applies to those that use the AI automatic saving feature, so if you are manually saving your money then there is no charge for this.
Chip currently has 4.5 out of 5.0 stars on Trustpilot from over 400 customer reviews. 74% of those have rated the app as 'Excellent' saying it is 'a really easy and effortless way of saving money'. Customers also say that they have 'saved far more money than I ever would normally'.
15% rate the Chip app as 'Bad' and most refer to experiencing issues when it comes to withdrawing the funds. There are numerous reviews mentioning technical problems when it came to withdrawing the money they had saved with Chip.
Alternatives to Chip
There are various alternatives to the savings app Chip and we summarise a few of those below. For more information on savings apps available in the UK at the moment visit our article, 'The best savings apps in the UK'.
Chip vs Plum
Plum is another app that uses AI to track users spending habits and like Chip, it can be downloaded as an app but it can also be used via Facebook messenger. Plum allows you to adjust your automatic saving amount depending on your saving 'mood' which isn't something that Chip currently offers.
Both Chip and Plum are appointed representatives of an FCA registered company but neither are covered by the FSCS themselves. You can earn interest on your savings with Plum up to 0.55% with Plum 'Pockets' compared to a bonus of 1.25% with a Chip+1 savings account, however, you'll have to invite a friend. You may wish to check out our savings 'best buy' tables for the best savings accounts.
Chip vs Moneybox
Moneybox is another app that helps you to automatically save your money, however it goes one step further in that it invests the money it saves for you. Moneybox rounds up your spare change when spending and invests it automatically on your behalf. This comes at a cost however as Moneybox charges a monthly fee of £1 as well as additional investing costs such as platform fees. Chip however, is currently free to download and save if you save less than £100 in 28 days (you will be charged £1 if you save above this).
In comparison to Chip, Moneybox is FCA registered and protected by the Financial Services Compensation Scheme (FSCS).
Chip vs App-only Banks
A lot of the app-only banks on the market such as Monzo and Starling offer solutions to help you save (similar to Chip), such as savings goals and automatic saving. Monzo and Starling Bank also offer a round-up feature that saves your spare change which you can set aside into dedicated savings pots.
Monzo and Starling are banks and are therefore registered and regulated by the FCA. They also offer protection on up to £85,000 of your money under the Financial Services Compensation Scheme.
You can find out more in our article, 'The best app-only banks in the UK.'
Pros of Chip
- Easy to set up
- Analyses spending
- Set savings goals
- Market-leading 1.25% returns if you refer a friend (using Chip+1 savings account)
Cons of Chip
- No FSCS protection (unless you have an interest account)
- Cannot set up standing orders to save
- Can take up to 48 hours for the money withdrawn to clear
- Can currently only connect one bank account to Chip
- £5,000 saving limit on interest accounts
Overall, Chip offers an automated solution and can be good for those that struggle with saving. You should consider whether it is something that works for you in the long term as you will be missing out on the opportunity to earn interest on your savings (unless you open an interest account). Chip can be good for short term savings goals such as a new coat or towards a holiday but savings accounts and ISAs may be better for larger savings goals such as a house deposit.
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