2 apps that make it simple and painless to save

Should you have money left each month but it just seems to vanish? If you are paying off debts, you may still want to put a bit aside so it’s easier to cope with unexpected problems.

This article looks at Chip and Plum, two apps that take the hard work out of saving. They move small amounts that you won’t miss from your bank account into a savings account several times a month.

I like them both so I asked several other people to try them. Read the reviews here and give one a go!

Overview of Chip and Plum

Both Chip and Plum are apps that save “automatically” for you. They work as follows:

• you give the app access to your online current account;
• the app then looks at your income and spending pattern over the last few months and works out what you can afford to save now. This may only be a few pounds;
• the standard calculation of what to save can be cranked up by two levels if you feel it is too cautious or down two levels if you are worried it is too large;
• this amount is then taken from your bank account by direct debit and put into a savings account for you;
• you can take money out of the savings account whenever you want, same day or next working day depending on when you ask for the withdrawal;
• you can “pause” the savings if you want;
• you tell the app what you want by conducting a text message conversation with a “chatbot”.

The big difference between them:

• Chip is an app downloaded to your IoS or Android mobile;
• Plum works within Facebook Messenger, looking like any other person you chat to in Messenger.

Apart from that, I would say that at the moment Chip communicates more often. It tells you first thing in the morning when it is going to save an amount and you can hit Cancel up to 4pm that day to stop this. With Plum, the amount just goes. I’m not sure this is important after you get used to it. Plum is saving away quietly in the background, Chip is a bit noisier but not at all obtrusive.

Common questions

Here are some of the things people have asked me:

How do I know they won’t take too much money?

They are designed to not take out so much you might need to use your overdraft. Both apps promise to refund your fees if they get this wrong!

What if I have an overdraft?

Both apps allow you to ask them to save when you are already overdrawn. In that case, of course, their “refund promise” doesn’t apply.

The issue of saving when you are in an overdraft is tricky. Mathematically it means you may be paying extra fees, but psychologically many people feel their only hope of clearing their overdraft is to put money aside so you can repay it all off at once and then start with a clean slate.

I would say definitely don’t save if you are in an unauthorised overdraft as the fees are so high.

Are they safe?

A sensible question to ask when you are handing over your bank account details! For both Chip and Plum your savings are ultimately sitting in an account in Barclays. I use them and my guess is that most people who use mobile banking on their phone will probably find these apps OK, but it’s you that needs to feel happy. Some details about Chip here and Plum here and they will talk to you about data, security, regulation, etc

If you aren’t happy leaving your accumulating pile of savings (doesn’t that sound good!) with them in the long term, you could always decide to withdraw them every few months and put them in a different savings account.

How do they make money?

Both are promising they will never charge for the service. Both are planning associated services which will be optional for you, so you can ignore them and stick with the free savings facility if you want.

Plum intends to use all the data it has on your expenses to suggest utilities and other services Chip is looking at a “smart overdraft” product – it will be interesting to see how that works.

What interest do you get?

Chip pays 0% at the start, but if you refer a friend (see below) you and your friend each get your interest rate increased by 1%, up to a maximum of 5%.

Plum doesn’t pay interest on savings. But it is testing at the moment allowing its users to put some savings into an account with Rate Setter, a peer-to-peer lender. The interest here is variable, currently around 3%, it will take 4-5 working days to withdraw the money and the capital isn’t guaranteed. If you (like most people reading Debt Camel) are concerned about the safety of your savings and quick access, this probably isn’t a good option for you.

For most people reading this, your savings aren’t likely to be huge so the interest rate isn’t that important.

How do the refer a friend bonuses work?

Both Chip and Plum have generous refer a friend bonuses at the moment. They may well become less generous over time.

• For Chip, you get a code your friend can input to the app on sign up – they then get an increase of 1% on the interest they get and so do you (max of 5%).
• For Plum, you get a link your friend can use to sign up. You get a bonus of £25 added to your account when three friends have signed up.

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What do people think of them?

Pete who blogs at Household Money Saving wrote:

Chip didn’t recognise my Santander 123 light account as being a current account. I linked Chip to my TSB account instead, which was straightforward and took just a few minutes.

It feels secure, but with any application like this, you have to take a leap of faith that a 3rd party will keep your banking details secure.

Money is moved to my Chip account each week automatically. Within a few weeks, I asked for the amounts to be lowered as I found them quite high. This took seconds to do and I saw the amount transferred drop by around 30%.

I’m not sure how the algorithm works. At the beginning of March, I had a balance of £800 and had £11 transferred to Chip. By the end of the month, I had reduced my balance to £300, but Chip took slightly more (£13) from me.

I do think it is a good way to save though, so would certainly recommend it. The language and style used are definitely aimed towards the 20 somethings, but Chip is a good way for anyone to save.

The answer to Pete’s query about the calculation is that the saving amount doesn’t depend only on the balance. Chip (and Plum) also looks at how long until you are next paid and what expenses you are likely to have before then. Often by the end of the month, even though your balance is lower, it’s OK to save more as you are soon going to be paid.

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Faith who blogs at Much More With Less wrote:

I found signing up for Chip very easy – a few personal details, some bank account info, and I was away. Took a week before Chip took my first savings from my bank account though.

You can decide yourself what to save, then Chip won’t do any automatic saving for a week or so.

I withdrew a token payment to see how it worked. I asked for the withdrawal one evening, and it was back in my bank account the next day – quick and smooth.

I find Chip much easier to access than other forms of internet banking. It’s also super easy to contact Chip using Live Chat – much easier than the multiple pages I’d click through with ordinary internet banking.

I worry that using just a 5 digit passcode from my smartphone is not the most secure. Overall I’m comfortable my savings are safe, even though Chip is such a new company because my money is held in a Barclays account in my name. Even if Chip goes down the tubes, I should still be able to get my cash back from Barclays.

I would definitely recommend it to other people. Even my mother could probably manage it!

The delay on the first saving is because of the time it takes to set up a Direct Debit. It’s the same with Plum.

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Eileen who blogs at Your Money Sorted says:

Plum feels easy, fun and exciting. I love the fact that it randomly messages to say that it has transferred money into my savings – it feels like a lovely wee surprise when it does that.

It was really easy to set up and the process made me feel that it was safe and secure. Their help menu is excellent and any questions that I had were answered by the FAQ section.

One thing that I am not keen on is the fact that the money transferred into Plum seems to take quite a few days to clear. If you needed the money quickly, then it seems as though you would not be able to get it immediately, so that is something that people should bear in mind.

I would honestly recommend it to anyone because it really makes saving simple!

The delay in moving the money into your savings and having it cleared is a combination of the way direct debits work and the money laundering rules. It is the same for Chip. The result is that you can take your previous savings out very quickly (same day if before 4pm on a weekday), but the latest saving amount going through isn’t available to withdraw until it clears.

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Dan, who is 23, wrote:

I thought it was odd using FB messenger for money but it seems to work. 

Not having to fill in an application form was good and easy to link up my bank account.  Money comes back quickly when you ask for it. You can see a statement of your savings. You can set up a joint saving goal with someone else, but not one for yourself – not sure why.

After the start, you don’t need to do anything really unless you want to take money out, pause the saving or up/down the level. 

I’m running in “chilled saving mood” which is 25% less than the normal mood. It’s not too much, I don’t miss the money and I might push up to the normal level soon, I was just cautious at the start.

The answer to Dan’s point on savings goals is that Plum is planning to add this in a few weeks! And I understand Chip will also introduce goal setting soon.

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My conclusion – both are great!

In addition to the people quoted above, I know a few more people that have used Chip or Plum and so far I haven’t met anyone that doesn’t like them… That is a pretty good recommendation!

I wouldn’t suggest trying both at the same time unless you have a lot of money sloshing around in your account, or they will both be trying to save it.

As to which is best for you, I would ignore all the stuff about interest rates and refer a friend bonuses – all these could change very easily. Pick the one you think will work best for you in the long term. I suggest you decide on the basis of whether you want to communicate through Messenger (Plum) or an app on your phone (Chip).

I would love to hear how you get on in the comments below. If you have a detailed question about one of the apps, it’s probably better to ask it directly to the app itself.

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