Best savings: How to get Chip’s 1.25% easy access rate and a £10 bonus

Savers with £10,000 can get access to a savings deal paying nearly three times the best buy rate available on an easy-access account with a This is Money bonus.

Four-year-old banking app Chip already pays an easy-access rate of 1.25 per cent on savings of up to £10,000 held in a special account, but is also offering a £10 cash bonus to those who join it before the end of April.

It means savers can earn £135 on £10,000 for the first time since February 2020, when a 1.35 per cent rate was offered by Marcus Bank, provided they use a special  access code – and we have sourced one for our readers through This is Money*. 

Chip already offered a select group of customers 1.25% on up to £10,000. Now a £10 joining bonus means savers can get a rate of 1.35%

Chip already offered a select group of customers 1.25% on up to £10,000. Now a £10 joining bonus means savers can get a rate of 1.35%

Those who join the money management app in order to earn the bonus must hold onto the account, which costs £1.50 a month after the 28 days, until at least 8 July.

The bonus will be paid between then and 22 July, while interest on the account is paid every 12 weeks. After 11 monthly payments of the fee is factored, users would end up with £118.50 interest on the maximum £10,000, for a rate of 1.185 per cent.

Chip was launched in 2017 and is one of a new breed of money management accounts which uses open banking technology to work out how much users can afford to save.

It does this every few days, with users able to stash away up to £100 every day.

The average age of its 355,000 users is 36, but the smartphone app is far from something exclusively used by younger generations. 

It has users who are as old as 94, while two customers in their 80s spoke to This is Money about how they had been driven to the app by the best buy rate.

Victor Webb, 81, from Birmingham, said he had signed up after he saw it on the TV and decided to give it a try, while 80-year-old Sue Diment, from Bedfordshire, said she had likely read about it on comparison site MoneySupermarket.

Both said low savings rates elsewhere had led them to try out Chip. ‘I just thought I’d give a try’, Victor, who has saved around £5,000 into the account, told This is Money. 

‘It would be nice to get an interest rate which pays for my everyday expenses, I’m looking for ways to improve my returns.’

However although familiar with smartphone and mobile apps, both did say they were still not 100 per cent sure they had completely got the hang of the account, how it worked and how it decided how much was saved.

‘For someone my age it’s not all that easy to understand’, Victor, who has resorted to watching explanatory YouTube videos, said.

They both added it was difficult to get in touch with anyone on the phone, highlighting a generational split with Chip’s younger users who may be happier to deal with the company through an automated chat bot.

Asked what they were saving money away for, Victor said it was largely to improve his returns but also potentially for a holiday, while Sue said it was mainly as a rainy day fund but potentially for flights to see her daughter, who has moved to the US and her son in Australia after the lockdown.

A rainy day fund, a safety net or whatever other term savers would give it was the most popular savings ‘goal’ among Chip users between March 2020 and March 2021, the app said, with a quarter of all 106,332 goals created set up for this purpose.

And in keeping with Britain’s lockdown savings habit, the average amount saved through the app each month rose from £108.89 per person last March to £514.23 last month. 

This has likely been driven by the arrival of rate-chasing older savers with more money to put away.

While the loss-leading account, which pays up to £125 a year on the full £10,000 before the fee is accounted for, is usually only open to those referred by existing customers, it, plus the £10 bonus, is open to those who sign up using This is Money’s exclusive link.

Money in the ‘Chip+1’ account is held with ClearBank, which means up to £85,000 is protected by the Financial Services Compensation Scheme. The interest is paid out of the app’s marketing budget.

After signing up savers have to connect their current account to the app in order for money to be automatically saved. It works with 17 UK banks, including Britain’s biggest names as well as the likes of Monzo and Starling.

However, customers of the likes of Metro Bank or Tesco Bank cannot currently connect to Chip.

This is Money special code for Chip 

The 1.25% rate and the £10 bonus from the Chip+1 account is only accessible if you’ve been referred by a Chip user or an exclusive VIP code, which This is Money has secured for readers.*

If you sign up to Chip and use that code, you will have full access to the account and can also refer a friend. 

> Find out more on the This is Money Chip+1 code here

Any savings held in Chip’s main wallet, which is where money is initially held after being swiped from a current account, are not protected by the FSCS. 

Instead, money is stored in a ‘ring-fenced’ account with Barclays, which should protect it if anything happens to Chip.

The auto saving features, which are based on analysis of users’ transactions by the app, cost £1.50 every 28 days after a month-long free trial. The app currently lets users stash £100 away for free, but will change its rules on 26 April.

The fee would cost £16.50 over 12 months, discounting the first month being free.

As a result, savers who put away £10,000 would ultimately end up with £118.50.

When Chip initially launched its invitation-only deal last year, the rate was more than double the best easy-access account available elsewhere on the market.

Chip uses AI to automatically set aside savings every few days. It is free to download but costs £1.50 a month after a free trial

Chip uses AI to automatically set aside savings every few days. It is free to download but costs £1.50 a month after a free trial

Since then, a continued fall in savings rates means the rate is now 2.9 times higher than the best easy-access deal from Paragon Bank, after the fee is accounted for. That account currently pays 0.41 per cent.

£10,000 saved into that account would return £41 after a year, £77.50 less interest than if it were held in Chip’s special account.

And Chip now also pays the 1.25 per cent rate on double the amount of money, having previously capped interest-earning balances at £5,000. It doubled the cap to £10,000 last month.

Even without the £10 bonus, which after the fee would give a return of 1.085 per cent, the rate on the Chip account would be two-and-a-half times the best easy-access deal from Paragon Bank.

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Editorial integrity is always of absolute importance to This is Money and no commercial relationships affect the independence of the editorial team.

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