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Finances | 15 January 2021

Earn a table-topping 1.25% on your savings

Savings rates have taken a huge nosedive this year with the top rates for easy access accounts dropping from 1.35% to 0.45%, which is the best right now 😭

But some welcome relief comes from auto-saving app Chip. It’s currently offering 1.25% for balances up to £10,000 which smashes other accounts. Usually you need a friend to refer you to get the 1.25% bonus rate but I've bagged you a code. New customers to Chip just need to download the app and sign up via this Chip* link and use the VIP code SNOOP21 💪

But first, here’s what you need to know…

What is Chip?

Chip is an auto-saving app available on both Android and iOS. Its big pitch to date has been its auto-saving functionality – you connect an account to Chip (like you do with me) and then it works out how much you can afford to save based on your spending patterns.

Previously it moved this into an electronic savings pot which didn’t earn interest or have the same Financial Services Compensation Scheme protection that traditional savings accounts have (which is why it’s never been my favourite savings vehicle). However, this account is different.

Earn 1.25% with the Chip+1 account

It’s newly launched Chip+1 account offers 1.25% interest on balances up to £10,000 if you’re new to Chip. To access the account, you need a code – I’ve bagged one just for Snoopers – it’s SNOOP21. Just download the app* and enter the code once you've signed up

Chip has two membership plans to choose from which give access to the platform. The first plan is ChipAI which gives you access to the Chip+1 account and the 1.25% rate on balances up to £10,000. This costs £1.50 every four weeks after a free trial.

The alternative plan is ChipLite which also gives access to the Chip+1 account but only gives 1.25% on balances up to £2,000, however it’s free.

But if you’re saving over £4,450 across the year the extra interest you earn will cover the fee.

If you want to be really geeky about maxing your interest, use these rules of thumb 🤓

  • Saving up to £2k? Opt for the free version. (You get a free trial of the paid version, but you can upgrade or downgrade anytime in your settings).
  • Got between £2k and £4,450 to save? You're better off saving the maximum with the free plan (£2,000) and saving the rest elsewhere as the fee you pay won't be covered by the extra interest you earn.
  • Got between £4,450 and £10,000 to save? Take the paid plan as the fee you pay will be covered by the extra interest you earn.

Your deposits into Chip+1 are fully covered by the FSCS

Traditional savings accounts regulated by the FCA are covered by the Financial Services Compensation Scheme (FSCS), which means if the provider goes bust, up to £85,000 of your money is covered per institution. Many of the new savings apps aren’t regulated in the same way.

However, the Chip+1 account is working with ClearBank to provide the account. ClearBank has a full UK banking licence so any money you put into the account is protected. If Chip went bust, you’d be able to access the money from ClearBank, if ClearBank goes bust, the FSCS kicks in.

There is one small caveat to this – the interest you earn is put into a separate (ring-fenced) account as this is being paid by Chip. So, the interest isn't protected in the same way as the money you deposit. The account the money goes into is ring-fenced by a high street bank.

If Chip goes bust, you would be able to access your interest from the high street bank. If the high street bank goes bust, you won’t get your bonus back.

It’s also worth noting that the interest paid doesn’t compound (this is where you earn interest on your interest). However, even when you factor that in, this account still beats the best of the rest out there.

Why is Chip doing this – is it too good to be true?

This is a significantly higher rate than the other accounts in this market, and I know I always tell you that if it sounds too good to be true, it probably is. However, this is legit. Chip is funding the interest bonus itself and it says that this money is coming from its marketing budgets.

➡️ Get Chip+1* with the code SNOOP21

If this isn’t for you, here are some alternative ways to boost your savings:

  • Earn up to 3% with a regular saver. Regular savings accounts are where you put away money each month, usually for a year. They tend to offer much better rates than easy access accounts but there are strict rules that come with them.

    For example, there is a minimum and maximum payment you can make each month and you usually have to pay every month (some might let you skip a month or two). But in return you get decent rates that beat easy access accounts.

  • Earn up to 2% with the best current accounts. Usually it’s a savvy money faux pas to keep your savings in a current account as the rates are so dismal but there are a few current accounts that buck the trend. These offers have been a diamond in the rough for savers contending with low rates in recent times. However, they tend to only be for small amounts and we’ve still seen the rates drop dramatically in the last few months.

    That said it’s possible to get 2% right now on balances up to £1,000 with the Virgin Money current account and there’s no minimum pay in. Nationwide is also giving 2% on up to £1,500 but only for a year. After this the rate drops off a cliff, so make sure you move your money again.

  • Earn up to 3.5% on kids’ savings. While adults savings accounts have dismal rates, there are still some good deals to be had if you want to save for your children. The best kids’ regular savers currently pay 3.5%, or you can get up to 3% on easy access savings if you have less than £2k to save.

    Kids are taxed in exactly the same ways as adults on savings, but as most children don’t have paid jobs, they can earn up to £18,500 in interest before paying tax.

  • Consider investing. If you have an emergency cash fund (ideally three to six months of outgoings) plus you won’t need to access funds in the short-term then it’s worth considering investing to potentially increase the gains you make on your savings pot.

    You do need to be aware and happy with the risk involved – there is a chance you could lose the money you invested and end up with zero. But if you choose sensible products and tuck your money away for the long-term, the returns might be higher. Have a look at my savings vs investing Snoop for more help on whether this is a good option for you.

So there you go, I hope this has helped.

*When you click on this link we get paid a small fee which helps us to keep developing Snoop. This doesn't affect the price you pay or our opinion in any way.

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