Chip vs Plum: Best Automatic Savings App?

Banking apps are certainly changing the way we manage our money here in the UK. But did you know that there are even ways through which you can start automating your savings, too? It’s not always easy to know how much to save from your monthly income, nor how much you’ll need to feasibly get towards larger goals.

That, thankfully, is where services such as Chip and Plum come in. These apps have started growing in popularity recently, which means I think it’s a great time to look into a Chip vs Plum matchup. Which app is going to work best for you to automate your savings for the better? Let’s break things down one step at a time.

Chip or Plum? Quick Summary

• Both Chip and Plum allow you to connect your banks through Open Banking.
• The apps use algorithms to calculate when to save money based on your income and expenses.
• Both are available for free for the basic tier and offered a subscription model to access their higher level tiers with enhanced service offerings.
• Chip has one free and one paid account levels, Plum has one free and four paid levels.
• Chip offers two rates based on whether the money is locked in for 90 days or can be withdrawn instantly. Plum offers two rate options, but the higher one is on paid accounts only.
• Chip lets you invest in regular market funds, but they’re also launching an alternative assets option so you can invest in art, wine, or vintage cars.
• Chip is easier to use than Plum at base level, though Plum has more gamification options.
• Chip is rated 3.9 stars on Trustpilot
• Plum is rated 4.5 stars on Trustpilot

Chip vs Plum: Apps to Automate Your Savings

What is Chip and How Does it Work?

Chip is a clever piece of AI tech that actually uses advanced mathematics to work out how much you need to save, and how you can feasibly afford to do so regularly. Specifically, the Chip algorithm works out what you can save every couple of days, without interrupting the money you actually need to live on.

It’s use the Open Banking platform, which means that you can use a variety of leading UK banks to tie up your finances. The app analyses your spending, lets you set, tweak and manage goals, and even has ‘saving streak’ features (if you’re a fan of high scores). Chip works through quick Open Banking validation and card registration, but these processes generally won’t take too long.

Right now, you can connect one bank through Chip, though this may change in future. It’s worth keeping an eye on Chip as it’s one of few savings apps with big plans to ramp up.

What is Plum and How Does it Work?

Plum works in a fairly similar fashion to Chip, It’s a money management app which has been around since 2016.

Plum can view your money via your bank account and credit card. It then adapts smartly to you so that it can make savings on your behalf. It’s a great way to automate money you want to save and invest.

One of Plum’s major assets lies in its savings levels – you can go from ‘shy’ mode all the way up to ‘beast’ mode. Much like Chip, Plum operates through Open Banking, meaning it shouldn’t be too tricky for you to get things set up from the word go.

How Do They Know How Much Money to Save?

Both Plum and Chip work through AI algorithms, meaning that they apply complex equations to work out exactly how much to save based on your income and outgoings, as well as your extended goals. To get the ball rolling, you’ll need to fill in a few details, and to let either app know what you’d like to save for, and how much you spend on a regular basis.

You can tweak and maintain the sensitivity of either app by choosing from one of several ‘levels’ of saving. With Chip, you can up the saving sensitivity from levels one to five. Plum, meanwhile, as mentioned, has ‘shy’ to ‘beast’ levels.

As an example, the ‘shy’ level allows you to save 50% less than normal, while ‘beast’ allows you to save up to 75% more. These settings help your app to work out how much you are physically comfortable with putting to one side.

That’s because, ultimately, even the best algorithms aren’t clairvoyant! Your circumstances and financial demands might change. Therefore, it really does make sense to give either Chip or Plum the heads up.

Where is My Money Stored, and Is It Safe?

Your money is safe through both Chip or Plum. Chip lets you effectively set up a separate bank account that’s managed through one of its back-end providers. Chip rotates through different banks based on where they get the best interest rate. Previously they were with Barclays, but now the Easy Access Account is with Allica Bank, the 90-day Notice Account is with OakNorth Bank, while the Prize Savings Account is with ClearBank. Deposits of up to £85,000 are covered at all of these banks under FSCS scheme, meaning should anything happen to the parent holders, you’re well protected.

Plum saves your money with Investec Bank Plc, which is also covered under the FSCS scheme for up to £85,000. Previously the money was stored in a Payrnet wallet. This is based at the Bank of England, and it’s also backed by the FCA.

It’s worth remembering, too, that your money is kept safe in ring-fenced accounts through both Plum and Chip.

Can I Earn Interest on My Savings?

Yes, it’s entirely possible to make money from interest on your Plum and Chip savings.

With Plum, you can choose from multiple savings ‘pockets’ which offer different levels of potential interest. For example, in the free or basic model, the single Interest Pocket offers 1.01% AER. To gain access to the 1.40% AER on your savings, you’ll need to upgrade to a paid tier with one of either Plus (fee of £1 per month), Pro (£2.99/mo), Ultra (£4.99/mo), or Premium (£9.99/mo).

These are all paid levels, and I’ll cover them in a little more detail below. Note however that it’s only worth paying the extra money if you will be using the other extra features that come with the paid tiers. Just as a reference point: if you pay that £1/mo for the Plus tier just to get that higher 1.40% rate, you only benefit if you have an additional £3,080 in savings! If you just intend to save, you would be better off with Chip instead.

Chip, meanwhile, offers up two interest tiers and both are free:

• Easy Access Account: Rate of 1.1%, paid daily. You can withdraw your money any time.
• 90-day Notice Account: Rate of 2.15%, paid monthly. In exchange for locking in your money, you get a higher rate.

Chip also offers a new and interesting twist – the Prize Savings Account. This account pays no interest however you have a chance of winning over £10,000 in prizes each month. The main prize is £10,000 each month and you get one entry for each £10 that you have in your account. There are 250 additional prizes of £10 each, but there’s a minimum deposit requirement of £100. It’s an interesting take on savings and perhaps could encourage more people to save! The concept is very similar in that sense to premium bonds.

Depending on what you like, there are clear pros and cons to how both Plum and Chip approach interest. If your intent is only to save, you’re better off with Chip as you get a higher rate without having to pay a fee.

Can I get a higher interest rate than Chip and Plum’s rates?

Yes, you can get a higher interest rate than both Chip and Plum. The current going rate is as high as 2.1% for no-notice accounts and 2.9% for 90-day notice accounts. However the trade off is that these are merely “dumb” savings accounts. They do not offer the advanced functionality that Chip or Plum offer with regards to automated savings and investing.

If you want to go for the highest possible interest rate, then you would have to opt for a 5-year fixed deposit. Your money is locked in for 5 years, but you can get rates of 4.5% to 5%!

Chip vs Plum: Savings Options

There are a few account levels and perks across Chip and Plum, meaning there’s more than just the free basic services if you’re serious about completely automating the process.

Chip Account Options

Chip has simplified their previous offering into two tiers now: Chip (free) and ChipX, which costs £65.05 per year (equal to £4.99/28 days) when paid in lumpsum. If you opt to pay monthly, their billing structure is a little confusing. The advertised fee is £5.99/28 days, but billed monthly, which really works out to £6.50 per month or £78 per year. I do not know why they went with a 28-day billing cycle, but easier just to stick with a monthly concept!

What I do however like about Chip is that you get access to all their savings offerings for free, whereas Plum has a basic tier and multiple paid tiers to get better savings offering. The table below summarize Chip’s offerings on the savings aspect of their offering. I discuss more on their investments offerings further below.

Plum Account Options

Plum, offers five different levels of account, with their free account (Basic Plum tier) offering a base rate of 1.01% on all money you invest.

The table below summarizes Plum’s offerings on the savings side of the story.

Plum offers a variety of ways to save. Frankly aside from the low interest rate, the Basic offering is decent. If you want more control over how you save, the Pro offering is the best choice here. The Ultra and Premium are only useful if you want enhanced access to their various investment offerings which I have discussed further below.

Let’s have a quick look at what the various saving strategies are:

• Automatic Saver: An automatic AI-based savings algorithm to calculate how much you can safely save
• Round Ups Saver: Round up your transactions from each week to the nearest whole number and allocate that extra amount to savings.
• Paydays Saver: Configure a fixed amount to automatically assign to your savings on the day you get paid.
• Rainy Days Rule: Sets a little money in to your savings account each day it rains where you live
• 52-week challenge: Starts with £1 per week of saving and ups that by £1 each week, so you save £2 in week 2, £3 in week 3, and so on. Over the course of a year, which is 52 weeks, you end up saving £1,378. Not bad!
• Interest Pockets: Little buckets, or pockets, of cash where you notionally save money for different goals such as a vacation, car, home, etc.

Plum also offers some enhanced options for their Ultra & Premium accounts like Money Maximizer, a boosted savings function, and the Plum card.

The interesting though is that even at the Ultra Tier, Plum’s rates are slightly lower than what you would pay with ChipX. The downside is that regardless of the fees, the interest rate for a savings account is still significantly lower with Plum.

As you can see, in the battle between Plum vs Chip, there are more than a few similarities. However, Plum really takes the complex and tiered route with their offerings. I personally prefer simple over complex as its one less thing to worry about. However many prospective savers may find some of these options appealing, so it’s really a personal decision!

Let’s take a look at a few of the more intriguing features that Chip and Plum have to offer between them on the investing front.

Chip vs Plum: Investment Options

If you’re saving money, then you may want to make it go even further with the help of an investment portfolio. It’s here where there are more key differences between Plum and Chip, and it’s worth noting the variations if you really want to grow your money.

Chip Investment Options

Chip offers a range of investment options. The same two account options discussed in the savings section are applicable here. In fact the fee (if you choose ChipX) is only paid once and covers both the savings and investment options. You do not have to pay twice.

There are a few key ways in which Chip differentiates their basic Chip offering from the ChipX offering:

1. Account type: You only get access to the tax-free stocks and shares ISA account in ChipX.
2. Investment funds: You get access to a broader variety of ETFs
3. Alternative Investments: Chip offers some access to new investment categories through fractional investing in hard assets like luxury goods, wines, and art.

The table below lists out the options that are provided under the free Chip account or the paid ChipX subscription account.

If you plan to use the “free” Chip account, remember that you will still have to pay platform fees, which are a minimum of £1 per month, or £12 per year. However in upgrading to the paid ChipX version you get access to the tax-free stocks and shares ISA account, which can be quite beneficial. For most people, just a fraction of the amount that you save in income taxes will likely easily pay for the additional £53 that you pay in platform fees.

The alternative investment side of things can be sexy to talk about, but I would wait and watch how the returns there trend in an era of rising interest rates. If you do allocate funds there, beware that these products have a high transaction and holding cost. You need to put your luxury watches and artwork in a vault, after all! Additionally, these funds are not regulated by the FCA, so you may face some additional risk there. If you do allocate money there, please do check the relevant fees, and I would recommend only allocating a small proportion of your portfolio there.

Plum Investment Options

Plum lets you start investing money from £1. Like Chip, you’ll have the opportunity to invest in their own funds, which give you a breakdown of different assets and avenues. For example, you can invest in a Clean & Green fund that lets you place your money behind socially responsible companies alone. Otherwise, you can invest in Tech Giants, which, while high risk, will allow you to invest money in some of the biggest names in technological innovation without having to cherry-pick.

There’s also a simple 3 option risk level to choose from which vary in levels of risk based on the breakdown of stocks vs bonds within the selected portfolio; Slow & Steady, Balanced Bundle or Growth Stack. Interestingly enough, Plum invests with Vanguard and deploys the various flavours of Vanguard’s LifeStrategy funds in the backend. For example, the Balanced Bundle invests in LifeStrategy 60% Equity Fund.

Continuing with Plum’s themes of offering many different tiers, we see the same tiers continued over from the savings account. Again the important note here is that the fees are for the combined savings and investment account. You do not pay a separate fee for the savings account and another fee for the investment account.

On the investment side, you face similar fees in both Chip and Plum as both require you to pay a minimum of £1 per month for the platform + the fees for the funds you select. In general Chip’s fund management fees are on the lower end, but not really a big differentiator. Once you’re below the 0.50% threshold for differences in fees, the savings over time will not add up to much for most people.

The other points that stand out between Chip and Plum are that Plum lets you buy individual stocks in their Premium tier, though this is limited to the largest names only. However on the flip side, Chip lets you invest in alternative investments.

Both companies let you invest in thematic funds, such as in ESG or emerging markets.

Chip vs Plum: Pros and Cons

Here’s where we need to take a look at the nitty gritty of either app. Yes – there are similarities between Plum vs Chip – but how do the auto-savers measure up when it comes to definitive pros and cons?

Chip Pros & Cons

Pros

• Chip is extremely easy to set up and use, and it’s FCA-backed
• Savings of up to £85,000 are covered under FSCS
• A prize savings account brings a fun way to save, but at the cost of not getting any interest
• You can get a higher interest rate tier of 2.15% even on the free tier
• You can change your auto-saving over five different levels
• Chip offers ETFs through BlackRock and alternative investments
• Account options are simple – a free and a paid tier

Cons

• You can only attach one bank account and you need to call Chip if you want to switch accounts.
• Fewer account options over Plum where there is some room to save fees
• Do not offer advanced options like a card or cashback offers
• Cannot buy stocks directly
• Slightly lower rating than Plum on Trustpilot

Plum Pros & Cons

Pros

• Backed by the FCA and savings up to £85,000 are covered under FSCS
• Invest in prebuilt funds for £1
• Multiple banking wallets available
• Lots of different fun gamification widgets and features to help you save
• Slightly higher rating than Chip on Trustpilot

Cons

• Interest rates don’t grow beyond 1.01% in free tier and 1.4% in paid tier, which are both lower than Chip
• No prize savings option
• Plum offers too many account levels in my opinion – five account levels. Up to 3 or maybe even 4 is okay. This is too confusing!
• Not as simple to navigate as Chip

Chip vs Plum: Which is Better?

In my humble opinion, both Chip and Plum have fantastic attributes. It comes down to what you are looking for.

If you want the following, you should go with Chip:

• Simple options
• Highest interest rate options + prize savings option
• Simplified investment options and no desire to invest in individual stocks
• Ability to in alternative assets like luxury goods, art, wine, vintage cars, etc.

If you want the following, you should go with Plum:

• Vast customizability options, but at the cost of complexity
• Ability to create savings pockets to help you better save your cash
• Ability to invest in individual stocks

Overall though I think both apps are great as they help you firstly with a very important goal – maximize your savings and do it effortlessly. We all could use a little help to increase our savings and grow our wealth over time, so at the end of the day getting started is what’s most important!