Look after the pennies with Chip

Look after the pennies with Chip

New phone = New apps = New opportunities!

Due to Microsoft seemingly dropping support for Window Phone users, coupled with the likes of Amazon, PayPal, Rightmove and eBay pulling their apps, I’ve flipped back over to the iPhone.

On doing so, the “App Gap”, which has widely been reported, is huge and has opened my eyes to a whole new world since I last used an iPhone, especially financial apps.

Pure Mobile Banking

Following on from the Bank of England plans to simplify the requirements for setting up new banks in 2013, four new ones are due to hit mobile phones in 2016;
· Atom
· Monzo
· Starling
· Tandem

Although personally I’m not entirely ready to move from a “high-street bank”, it is something I’m interested in following of the next few years. The main fear is “is it secure” but having said that, is any bank secure?

As long as they are FCA covered, I guess they are no better or worse than the traditional financial institutes.

Squirrelling away the pennies

For the time being, an “in-between” step is emerging which after first becoming popular in the US, is now hitting the shores here in the UK. A new automated way of saving!

Putting away a few pennies or pounds every week, equivalent of example to a Costa coffee, is something most people wouldn’t even think about let alone actually doing.

But what if it was automatic?

chip

Chip claims to be the first of its kind to focus on young people’s greatest challenge: saving. An estimated 30% of adults living in the UK have less than £100 in savings.

How does it work?

Chip saves money for you in an intelligent way. Every few days, Chip’s algorithm calculates what you can afford to save based on your spending habits. It then transfers that money from your current account to your Chip savings account automatically.

Chip connects to the user’s online banking, analyses their spending and calculates how much they can afford to save without having an impact on their day-to-day spending. That money is then automatically moved into their Chip savings account.

The chat-bot interface not only positions the app perfectly for Facebook Messenger’s new Bot Store but also enables Chip to communicate with users via friendly, informal messages and enthusiastic use of emojis and GIFs. This establishes a positive relationship between Chip and its users, and between users and their money.

What are the interest rates?

Currently Chip offer 1% however if when you join, you enter the referral code 5Y7AMM you can claim an extra 1% on your savings, giving you more than most high street banks.

The idea of Chip isn’t really to invest heavily, more along the lines of drip feeding the odd few pounds you have in your current account that you probably won’t even miss and making better use of them longer term.

Does it actually work?

Since setting it up, I’ve not yet had a transaction taken from my account, as it requires 10 days for the Direct Debit instruction to be finalised.

Once the Direct Debit is in place, Chips algorithm then needs to determine how much money, if any, is available to transfer. So far it hasn’t yet identified anything but it is early days!

What if I go overdrawn?

Chip are so confident in their algorithms ability to determine how much loose change you have, that their transfer results in your going overdrawn, they will refund immediately any money, pay any bank charges incurred and giving you £10 for the hassle.

This doesn’t mean that any negative impact on your credit rating will be removed, so it’s something to bear in mind.

Is my money safe?

This is one question everyone should be asking whenever moving money. The good news is that any money Chip transfers from your bank account, is held in a virtual account in the user’s name with Barclays.

Currently Chip accounts are provided by Prepaid Financial Services Ltd, which is authorised and regulated by the FCA with an e-money licence with plans to get FSCS accreditation in 2017.

Chip is available to download now in the App Store and Google Play and works with the following banks;
· Barclays
· Lloyds
· Natwest
· Nationwide
· RBS
· TSB
· Halifax
· First Direct

More information

There have been a number of articles covering Chip amongst other online banks and the future of banking;
· BBC
· Huffington Post
· TechCrunch

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