This is quick recap of some of the savings apps – which use AI to automatically move money into a savings pot – featured in Wallop of the Week on the Gadget Show, first aired March 9, 2018.
The first was Chip, which uses AI to analyse your bank account and move small amounts from your bank into a savings pot. The savings pot is not controlled by Chip, but is held in an e-wallet by Barclays.
You can earn anything up to 5 per cent interest, if you invite 5 other friends to join. This is a very decent interest for an instant access savings account. I currently earn 1.2 per cent in my Birmingham Midshires savings account.
How safe is it?
It’s worth pointing out that though Chip is regulated by the Financial Conduct Authority – or rather Prepaid Financial Services is (they manage the money on behalf of Chip) – the savings themselves are not protected by the Financial Services Compensation Scheme. This is the scheme that was strengthened following the collapse of Northern Rock, and ensures any savings up to £85,000 are guaranteed. If Barclays was to go bust, your Chip savings would be lost. How likely is Barclays to go bust? Very unlikely, but it’s impossible to guarantee that 100 per cent.
Yes, many users complain it takes quite a few days for the money to leave their bank account and arrive in the Chip pot. Often parcels of money show up as ‘pending’. That’s because Chip moves money using direct debit, and it takes between 3 to 5 days for the transaction to take place. You can, however, withdraw money very rapidly.
Plum works in a similar way to Chip above, in that it automates your savings. But you communicate with it via Facebook Messenger. Again, it has read-only access to your bank account.
Your money is invested in a peer-to-peer lending platform, and Plum reckons you will earn about 3 per cent.
How safe is it?
Plum is not yet regulated by the Financial Conduct Authority, though it is applying for a licence. The savings themselves are, in a similar way to Chip, held by a third party (this time with a company called Mango Pay), which put the money in an e-wallet. This too is run by Barclays. But, again, the savings themselves are not protected by the Financial Services Compensation Scheme.
Again, many users complain it takes quite a few days for the money to leave their bank account and arrive in the Plum pot. Often parcels of money show up as ‘pending’. That’s because Plum also moves money using direct debit, and it takes between 3 to 5 days for the transaction.
Which?, the excellent consumer organisation, did a good review of both accounts last year. You can read it: here.