On the run-up to Christmas 2019, I was approached by Chip mobile banking app to send out a link to all my readers offering a free £10 in exchange for signing up to them. I would also get £10 for each person who used my personal link. However, it wasn’t an app I’d used before so I didn’t agree to this arrangement. I did sign up myself though to try it out first and this is what I found.
What is Chip?
Chip is a mobile banking app that links to your current account. The app allows you to set savings goals and it will save a small amount of money on a regular basis into your Chip app. The idea is that if you save small and often, then you’re more likely to stick to saving. You shouldn’t really notice that you’re saving.
However, after just over a month of using the app, these are the reasons I wouldn’t recommend it.
1. Your money is not protected by the FSCS.
Instead, your money is stored as e-money. The money is held in a Barclays bank account and direct debited across. So if Chip closed down you would need to cash out through Barclays, but if Barclays went under, you’d lose your money.
2. Chip app takes savings, even when you can’t afford them.
The Chip app can take a saving even if that takes you into your overdraft. I learnt this the hard way and paired with the changes to overdraft charges in early 2020, this was a pricey lesson. I’ve since read that there’s a guarantee you can claim a refund through with Chip for this error as it shouldn’t happen but this isn’t mentioned on the app or obvious on the website.
3. Withdrawals aren’t instant.
If you want your money on the same working day, you need to request a withdrawal before 2pm. If you do it after 2pm or on a weekend, your cash won’t be available until the next working day. When you request a withdrawal, the app only tells you this after you’ve requested the withdrawal. For an app that seems so dynamic in other ways, this was incredibly frustrating.
4. You’re limited to only three savings goals.
I have no idea why there is a limit of three savings goals but it feels really limited. As an app aimed at predominantly Millenials, you’d think that there would be sufficient options to save for a holiday, car, house, wedding, Christmas, maternity leave etc., plus more affordable things like a spa day. If you can’t have enough options on this, then you’re likely to just keep saving for the smaller goals as you’ll get the gratification of achievement quicker which is a real shame because this generation needs more help with the bigger savings too.
5. There are no separate pots of money
When you fulfill one of your savings goals, the money isn’t saved in a separate pot for this. The app marks the goal as achieved and then transfers the money to the other two goals straight away for some reason. So you need to withdraw the achieved goal money immediately to spend on what you’d saved it for. Otherwise, the totals on your other goals go up, even though you haven’t put extra money in and this can really confuse the situation. It is particularly annoying if you were wanting to use one of your goals to set up an emergency fund.
6. You can’t move money between savings goals.
This is really frustrating as priorities change for all sorts of reasons you might need to shuffle your numbers to focus your mind on achieving a certain goal quicker than the others. This inflexibility was really surprising.
7. No signal? No idea.
The Chip app sends a notification in the morning to let you know how much money is going to come out of your current account into your Chip app and you have until 3pm to view and cancel this transaction if you don’t want to save that day or need to adjust the amount. This only works if you have a phone signal at the time of the notification pinging. If you don’t, you won’t know unless you go into the app manually to check each day.
8. You can’t use Chip for joint savings.
I thought Chip might be a useful app to save up for a family holiday with my partner, but unfortunately, you can only connect one current account to the savings app.
9. Overdrawn on my goals?
After withdrawing all my money from my Chip app to pay for a costly car MOT, I had an auto-save the next day. This was all added to one of my savings goals (even though across the three goals it should have been a 40:40:20% spread) and for some reason STILL unknown, it took money from my other two goals, which were obviously already at zero, into minus monies! There’s some many confusing things wrong with this. Firstly, it’s not really going overdrawn anywhere because it is all just one pot of money so why it would even need to have the function to say minus cash is beyond me. Secondly, is my next point.
10. Things just don’t add up!
You’ll see from my screenshot below the aforementioned overdrawn status on two of my goals, but the total in my third goal is more than the total amount in the account according to the top right-hand corner. How anyone can trust what is going on in this account, especially when you’ve had more savings in there over a longer period of time is baffling.
11. Live chat isn’t there when you need it.
Live chat is only available 8am – 5pm which I found really disappointing. I thought an innovative banking app would have around the clock support. Traditional high street banks have phone lines open for longer hours than these!
Ironically, Chip’s tag line is “You can do anything.”
But actually, you can’t. Whilst I agree, conceptually this app is a great idea to get people to automatically save and not have to think about it, it’s just not good enough yet in my opinion.
Disclosure – you won’t be surprised to hear that this wasn’t a collaborative post.