Chip vs Plum: Apps to Automate Your Savings
Banking apps are certainly changing the way we manage our money. 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.
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, but you can only auto-save with a free account through Plum.
- Plum offers 0.25% interest at free level; Chip offers 1.25% after 12 weeks of saving.
- Chip is setting up investments with BlackRock, Plum lets you invest from £1.
- Chip has two main account levels, Plum has four.
- Chip is easier to use than Plum at base level, though Plum has more gamification options.
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 an 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.
For your exclusive invite to Chip+1 use code: FINADS22
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’. 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 and Plum. Chip lets you effectively set up a separate bank account that’s managed through Barclays, and it’s only available as e-funds. This account is backed by the Financial Conduct Authority, or FCA, meaning should anything happen to the parent holders, you’re well protected.
Plum saves your money 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, the Easy Access pocket, free or basic model, offers 0.25% AER. To gain access to 0.40% AER on your savings, you’ll need to upgrade to account options in Plus, Pro or Ultra. These are all paid levels, and I’ll cover them in a little more detail below.
Chip, meanwhile, offers up to 1.25% interest on savings as a ‘bonus’ with specific accounts. However, while this may sound as if it instantly beats what Plum has to offer, Chip doesn’t actually provide an interest rate right away. You’ll need to have a Chip+1 account, and it gets paid every 12 weeks.
However, you’ll need to remember that any bonus money you earn through Chip+1 isn’t backed by the FSCS, and that it’s only available on up to £10,000 worth of savings. Therefore, there are clear pros and cons to how both Plum and Chip approach interest.
If you do fancy taking a closer look at Chip+1, I’ve got an exclusive link for PFF readers:
For your exclusive invite to Chip+1 use code: FINADS22
Chip+1 is normally available on invitation only, so you’ll be taking advantage of exclusive rates without having to count on someone else already using the service.
Chip vs Plum: Account 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 offers Chip+1, which as mentioned, is an exclusive service that allows you to claim a big 1.25% bonus on savings up to £10,000. This, Chip advises, is the best rate for easy access savings on the market right now.
However, there is also a basic plan through which you can manage your money through Chip for free. It’s called ChipLite, and while it’s great for managing your money, you’re going to need to upgrade to ChipAI to make use of automated savings. This service is available for a fee of £1.50 every 28 days, which in my opinion is a small price to pay for the amazing functionality and convenience.
Plum, meanwhile, actually offers four different levels of account, with their free account offering a base rate of 0.25% on all money you invest. Unlike Chip, you will benefit from automated savings for free, and what’s more, you can set up their ‘Lost Money’ feature to ensure you know where money’s going.
The Plum Plus service is £1 per month and offers up to 0.40% AER, as well as access to three different banking pockets, and investing from as little as £1. Plum Pro is £2.99 per month, and offers unlimited banking pockets, as well as additional diagnostics, savings gamification and goal setting. The top account at Plum is Plum Ultra, which grants you unlimited pockets, an extra cashback benefit, and access to the popular Money Maximiser. That’s available for £4.99 per month.
Chip vs Plum: Features
Let’s take a look at a few of the more intriguing features that Chip and Plum have to offer between them.
Chip Features
- Five levels of saving speed
- Auto-save adjustment (you’re still in control!)
- Payday saving
- Goal setting for big savings targets
- Quick bank setup and connection
- Save streaks – track your automated savings high scores
- Deposit and withdrawal
- 1.25% interest bonus available every 12 weeks (Chip+1, up to £10,000)
Plum Features
- Deposit and withdrawal
- Six savings speed boosters
- Round-ups (round up your penny payments up to the nearest pounds to save)
- 52 week challenge (increase your savings week by week)
- 0.40% interest available from £1 per month
- Quick bank setup and connection
- Pay day saving
- Rainy day saving – Plum will track local weather and save every day it precipitates near you!
As you can see, in the battle between Plum vs Chip, there are more than a few similarities. However, many prospective savers will also likely find there are a few key differences to help them make that all-important download decision.
Keep reading, of course, as I’ll bring this all together in the final few paragraphs. Sit tight!
Chip vs Plum: Investments
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.
Plum lets you start investing money from £1. However, instead of offering you single company stocks to invest in, 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.
The investment side to Plum is one of the major features of the app. However, it’s not the be-all and end-all, and you can continue to auto-save as normal through your default wallet parameters.
Chip, meanwhile, is in the process of bringing investments to its app. At the time of writing, the brand is working to build a unique platform through BlackRock, with three different funds based on your attitude to risk. This is a big partnership, as Chip rightly states – BlackRock investments have never been available through such an app service before.
Therefore, if you want to start investing in the here and now, you should use Plum. However, sign up your email address for updates on Chip’s future BlackRock launch and you’ll be able to compare their benefits a little closer. Just hang in there!
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
- You can claim a 1.25% interest bonus after 12 weeks, the best deal of its kind right now
- You can change your auto-saving over five different levels
- Chip is partnering with BlackRock to develop a leading investment service
- Account options are simple
Cons
- No interest rate by default at start of saving
- 1.25% rate isn’t protected, and is limited to first £10,000
- Fewer account options over Plum
- You can only attach one bank account
Plum Pros & Cons
Pros
- Plum offers five account levels, up to £4.99 per month, with 0.25% AER available for free
- Plum has fun gamification widgets and features to help you save
- Invest in prebuilt funds for £1
- Multiple banking wallets available
- Backed by the FCA
Cons
- Interest rates don’t grow beyond 0.4%
- Not as simple to navigate as Chip
Chip vs Plum: Which is Better?
In my humble opinion, both Chip and Plum have fantastic attributes, but it’s Plum that wins out in the end.
Plum essentially lets you start saving with interest building from free, whereas you have to do a little more work to get to the 1.25% Chip has to offer. Plum also appears to be the more comprehensive, feature-rich service, even if Chip is a little more user-friendly.
However, keep in mind that Chip has a lot of room to grow, and that the BlackRock investment engine might just sway things in a different direction.
For your exclusive invite to Chip+1 use code: FINADS22
Take a close look at the different features on offer across both Plum and Chip and consider your own unique savings needs moving forward.
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