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 Plum and Chip, 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 Plum & Chip

Chip and Plum are both apps that save “automatically” for you during the month when they calculate you can afford it.

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”.

With both of them you can set up savings goals  – for example you could say you want to save £300 by November for Christmas. Many people find putting a number and a date on your target gives them an incentive to save more.

They are both free apps that can be downloaded from the Apple or Android stores.

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! You can tell the app to save a bit less or a bit more.

If you feel nervous, you can change the app setting so that it “saves a bit less” for a month or two then if that feels very comfortable dial it up to its normal rate.

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.

Are they safe?

A sensible question to ask when you are handing over your bank account details!

For both apps your savings are ultimately sitting in “ring-fenced” accounts with Barclays. This means that it isn’t used to fund the day to day business of running Chip/Plum, so if they did go bust your money hasn’t been spent by them.

What interest do they pay?

(NB these rates are correct in August 2020.)

Chip pays 0.9% interest.

The amount Plum pays depends on whether you need your money instantly or not:

• no interest if you want to be able to get your money back the same day;
• 0.6% interest if you are happy to give 1 days notice.

So Chip is paying a tiny bit more, than Plum.

You could get better rates in the best easy access savings account, but not a lot more as all interest rates are low at the moment.

I think the importance of these apps is that they let people accumulate small savings who have never managed to save themselves. If that’s you, being able to save say £25 a month is worth a LOT more than the tiny amount of extra interest you could get in a different account where you have to save the money yourself.

With Plum you have the option to invest your savings in some investments. I don’t recommend this. it puts your money at risk, there are some fees charged and you may not always be able to sell the investments immediately. Most people reading Debt Camel are concerned about the safety of their savings and quick access, so putting them into investments probably isn’t a good option for you. Plum also charges £1 a month for this as well as extra investment charges. For small savings amounts, these charges can really add up.

Other ways to save with Plum

Plum has introduced another way to save called “round-ups”. It says:

Round-ups is a feature that rounds up each of the previous week’s transactions to the nearest £1 and transfers the spare change to your Plum account every Monday! For example, if you spend £4.50 on a coffee, Plum will round that up to £5, moving 50p into your Plum account.

It’s a bit random how much it will save for you – one week all your transactions could end in .98 or .99 and it would only save pennies. And if it saves a lot one week with this, it will probably just reduce the “auto-save” it next calculates. But some people like this feature, so it’s there if you want it.

Plum also lets you save a set amount on your payday, but at the moment (mid 2020) it’s only for iOS users, not Android.

What do people think of them?

Pete who blogs at Household Money Saving wrote:

I linked Chip to my TSB account 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 going to be paid soon.

---

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. 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. 

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.

---

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, but the latest saving amount going through isn’t available to withdraw until it clears.

---

Dan, who is 23, wrote:

Not having to fill in an application form for Plum 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. 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.

---

My conclusion – both are great!

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.

From October 2020, Chip will be charging £1.50 a month once it has automatically saved £100 for you.

This gives you a chance to try Chip for free. After a couple of months you can see how much it automatically saves for you and decide if it’s worth the fee. If it can save £40 a month without you noticing you may think paying £1.50 a month for this clever app is a bargain.

But I agree with the conclusion in this money-blogger’s review of Chip – Chip is a great app but you can get the same automatic saving with Plum, without the £1.50 charge.

If you are trying to decide which to use, for me this tips the balance in favour of Plum.

---