Chip Review 2024: Pros & Cons

Chip, founded in 2016 by Simon Rabin and Alex Latham, stands out as an innovative savings and investing app designed to address the challenges of poor budgeting habits.

Using artificial intelligence (AI), Chip determines a manageable amount to automatically transfer from users' current accounts to dedicated Chip accounts, seamlessly integrating with their daily spending habits. The app offers four distinct savings accounts—Instant Access, Prize Savings, Easy Access, and 90-Day Notice—providing users with flexibility in managing their finances."

"By connecting to users' bank accounts through Open Banking, Chip not only facilitates automatic savings but also allows users to invest through the app using funds provided by BlackRock.

The underlying technology ensures a straightforward and effective savings strategy, enabling users to accumulate significant savings over time without noticeably impacting their day-to-day financial activities. Chip's approach offers a compelling solution for those seeking a seamless and inconspicuous way to save and invest.

Supported UK Banks and Connectivity

• Connection Methods: Open Banking or manual linking
• Efficiency Tip: Open Banking recommended for spending history analysis
• Supported Banks: Bank of Scotland, Barclays, Danske, First Direct, HSBC, Halifax, Lloyds Bank, Monzo, Nationwide, Natwest, RBS, Revolut, Santander, Starling, TSB, Ulster Bank

Savings Account Comparison Table

Please note that while the Instant Access Account offers a competitive interest rate, the Prize Savings Account introduces the chance to win prizes in a monthly draw. FSCS protection is shared between these accounts, providing users with security up to the £85,000 limit across both accounts.

Chip Account Options:

1. Free Account:
   • The standard account is free and includes essential features like connecting to your bank account, initiating automatic savings, and setting financial goals.
   • Investment options are limited to a General Investment Account, with potential tax implications if profits exceed £6,000 annually.
   • While labeled as free, there's a 0.5% fee on your savings per year when invested. Additionally, the chosen investment fund incurs its own fees, ranging from 0.06% to 1% annually.
2. ChipX (Paid Account):
   • Priced at £5.99 every 28 days (or £65.05 annually), ChipX offers all features of the free account along with the added benefit of opening a Stocks & Shares ISA for tax-free savings.
   • ChipX provides a broader spectrum of investment options, including ethical choices, clean energy, and crypto funds.
   • Access to alternative assets, such as investments in art, fine wine, and cars, is a distinctive feature of ChipX.
   • Notably, ChipX eliminates the 0.5% fee on the total amount of investments that exists in the free plan. This structure allows for potentially significant savings as your investments grow, as the fee remains flat relative to the total investment amount.

Chip Costs Breakdown

• Basic Plan (Free): Provides daily interest and savings goals at no cost.
• Recurring Saves: Charged at £0.25 per save.
• Auto-Saving: Incurs a fee of £0.45 per save.

In summary, Chip's Basic plan is free, offering fundamental features. However, additional charges apply for specific functionalities like Recurring Saves and Auto-Saving. ChipX, the paid plan, introduces advanced investment options and alternative assets, eliminating the 0.5% fee on total investments found in the free plan, potentially resulting in cost savings as investments grow.

Safety and Regulation of Chip

Chip, authorized and regulated by the Financial Conduct Authority (FCA) , ensures the security of your finances. This regulatory approval establishes trust in Chip's ability to manage and protect your money. The Financial Services Compensation Scheme (FSCS) provides additional reassurance, safeguarding your cash deposits up to £85,000.

Importantly, Chip's safety measures extend to the structure of your investments. Funds are held within the investments themselves, independent of Chip's financial standing. Even in the event of Chip encountering financial challenges or closure, your investments remain secure.

It's crucial to note that 'alternative assets' like fine wines and cars, if chosen for investment with Chip, do not carry FSCS protection.

Although Chip is not a conventional bank, its authorization by the FCA for payment services, including managing "e-money wallets," underlines its commitment to financial security. While customer funds held in the main Chip account are not covered by FSCS, they are stored in a segregated account at a major UK bank, ensuring protection in case of unforeseen financial issues.

Regarding data security, Chip holds a data control license, ensuring compliance with the Data Protection Act. With robust measures like 256-bit encryption for online banking details and a commitment to not storing user data, Chip prioritizes privacy and security for its users.

Chip Customer Reviews Overview

Positive Reviews:

• On Trustpilot , Chip boasts a commendable rating of 3.7 out of 5 from over 1,500 reviews.
• Customers appreciate the app's user-friendly interface and effective savings assistance.
• Excellent customer service is frequently highlighted as a positive aspect.

Mixed Reviews:

• Chip currently holds a rating of 3.6 out of 5 on Trustpilot based on nearly 1,500 reviews.
• A notable 65% of customers rate the app as 'EXCELLENT,' citing it as a straightforward and efficient way to save money. Some customers express saving significantly more than they would through traditional methods.
• However, 23% rate the app as 'BAD,' with many citing challenges in withdrawing funds. Several reviews mention technical difficulties when trying to access the money saved with Chip.

In summary, customer feedback for Chip is generally positive, emphasizing the app's simplicity and effectiveness in encouraging savings. While the majority of users find the experience excellent, a notable portion mentions challenges, particularly related to withdrawing funds and technical issues, highlighting areas for potential improvement.

Key Pros of Chip

1. Epic Savings Rate: Impressive savings rate for the potential of significant returns.
2. Chance to Win £10,000 Monthly: Exciting opportunity through monthly prize draws.
3. Perfect for Beginners: User-friendly for those new to savings and investments.
4. Good Customer Support: Reliable customer support services.
5. Start for Free: Access to a free account option for a cost-free start.
6. Easy-to-Understand Investments: Simplified investment processes for user comprehension.
7. Auto-Saving: Effortless and automatic savings feature.
8. Deposits FSCS Protected: Ensures the protection of deposits through the Financial Services Compensation Scheme (FSCS).

Key Cons of Chip

1. No Standing Order Setup: Inability to establish a standing order for automated transactions.
2. Varied Withdrawal Times: Withdrawal times are contingent on the specific savings account, leading to potential inconsistencies.
3. Additional Charges for Recurring Saves and Auto-Saves: Extra charges apply for Recurring Saves and Auto-Saves on the Basic plan, with auto-saving costing £0.45 per transaction.
4. Single Bank Account Connection: Restriction to connecting only one bank account to Chip, limiting account linkage options.
5. Cost Consideration for ChipX: ChipX is deemed relatively expensive for users with limited investments.
6. Limited Investment Options: Offers a restricted range of investment options, limiting diversity in investment choices.

Summary of Thoughts on Chip

Chip is highly regarded for its ability to make saving money a seamless and almost automatic process, catering to individuals who find saving challenging. The Instant Savings Account stands out as one of the best in the market, offering competitive rates and quick access to funds in just minutes. The app's user-friendly interface contributes to a positive experience, and its innovative approach extends to investing, even though the fully loaded version is considered slightly expensive.

Despite the cost, the investment options and the inclusion of a tax-free ISA in ChipX are seen as valuable, especially since it eliminates the 0.5% fee on growing investments. The customer service is praised for its effectiveness, making the overall user experience positive. Chip proves beneficial for both short-term and long-term savings goals, providing automated solutions and helping users improve their saving habits without the need for complex calculations.

While additional charges may apply for certain features on the Basic plan, the overall verdict suggests that Chip is a valuable tool for those looking to enhance their financial habits and achieve various savings goals, whether for a holiday or a house deposit. The app's continuous innovation, including the introduction of new accounts like the Prize Savings Account and Instant Access Account, further adds to its appeal.