How to start saving money using an app
Getting on top of your finances and finding ways to save money can be a daunting task. It might seem difficult to find a way to put money aside to start building a savings pot. There are mobile apps now available that automatically help to categorise your spending and help you to budget and set money aside to start that rainy-day fund.
Below we review some of the best money saving apps in the UK showing how they work, how they help you to save money, their costs and features. Increasingly these apps are now also offering savings accounts with attractive rates of interest. We explain more about how these savings work below.
These types of apps connect to your bank account so they can analyse your spending habits and income. They then use this to build a picture of your finances and identify where you might be able to save money, help you set a budget and to start saving money. This can save you a lot of time and effort, help you become more confident handling your finances and start to put money into a savings pot.
The Plum app analyses the spending from your bank account to identify points when you might be able to put some money into your savings pot. It also offers Round Ups, where your transactions from the week are rounded up to the nearest pound and the difference put into your savings.
These features you can help you to save little and often and in sums that you probably wouldn’t even notice at the time. Any money you save goes into your Primary Pocket, you won’t earn any interest on this but the funds are almost immediately available. It’s also not a good idea to let your savings fund build up here as the money is not protected by the Financial Services Compensation Scheme (FSCS). Instead you should consider moving the money to the new Plum easy access savings account explained below.
The app also helps Plumsters, the name given to those using the Plum app, to identify opportunities to save money on your bills, such as utility bills. The app also shows how your spending compares anonymously to other people like you.
Plum has launched an Easy Access Account at 0.55% AER for Plum Pro customers and at 0.35% AER for Plum Plus customers. Any money placed into the account is held in trust by Investec Bank plc and if either Plum or Investec Bank were to fail you could claim through the FSCS. FSCS protection is up to £85,000 per deposit holder. Any savings held with Investec Bank plc directly or elsewhere are counted in this total limit. If you need to access your money you will need to give at least one working days’ notice.
There are two tariffs available, Plum Plus costs £1 per month and gives you access to their easy access savings and the option to make investments. Plum Pro is £2.99 per month and gives access to all the features available on Plum.
Plum places security of customer data as a top priority. Plum cannot access its customers’ banks log in details and access to your bank account data is on a read only basis. Sensitive data is stored securely and encrypted.
Plum is regulated by the Financial Conduct Authority (FCA) for payment services. Any money held with them outside of their Easy Access Account is held under e-money rules. This means the funds should be held in a separate UK bank account reducing the risk of your money being lost if the firm goes bust.
Plum was founded by Victor Trokoudes and Alex Michael in London in October 2016 with the aim to help more people to start putting money into savings. Today it is backed by many investors include 500 Startups and VentureFriends.
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Chip is an automatic savings app. When you sign up to the app you are invited to connect your bank account using Open Banking. Chip then uses AI to analyse your spending and bills and calculates what you can afford to save every few days. You can change or cancel the suggested amounts to save before they happen. These savings are placed into Chip account. This account does not earn interest, but you can quickly send money from your Chip account to your bank account if you need to. Any money held in your Chip account also isn’t covered by the FSCS, so it’s best not to let funds mount up and you could instead transfer these to the new Chip+1 account that does come with protection.
Chip has launched a new easy access savings account called Chip+1. The account does come with protection from the FSCS as the money is ultimately held by a UK regulated bank called ClearBank.
This account offers a bonus payment on your balance of 1.25% paid every 12 weeks. This bonus is not paid as interest and may be taxable. There is no fixed end date to the bonus, but this could be changed at any time by Chip. Savers can put up to £85,000 into the account but the maximum amount for any bonus is £2,000 for those using the free version of Chip and £5,000 for those with the paid for version.
You can get started with Chip using a free trial. Savers using Chip’s AI to auto save can hold up to £100 before needing to pay a fee of £1.50 every 28 days. Once you exceed £100 using autosave then you will automatically be enrolled to ChipAI with the £1.50 fee.
Those saving manually into Chip can continue to do this under the free trial status and therefore avoid paying the regular fee. However, if you want to use Chip+1 account then those with the free trial can only earn a bonus on a maximum balance of £2,000. Those with the paid for version of Chip can earn a bonus on up to £5,000.
Chip was founded by its current CEO Simon Rabin in February 2016. It attracted 11.5m euros of funding via Crowdcube and the Future Fund in September 2020.
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Snoop is a new, free money-saving app that works 24/7 to review your finances and spot clever ways to save you money. It uses Open Banking to connect your bank accounts and credit cards so you can see your balances and transactions all in one place.
Snoop will watch your regular bills and tell you if you are paying too much compared to other providers or if your prices start to increase. It also helps to you to switch your energy supplier too, all within the app. Snoop provides personalized updates of money-saving ideas all based on your spending habits.
Right now, Snoop doesn’t include an autosave feature, instead it sends you your list of ways to make savings. You can then decide what to do with these savings, for example putting them into a savings account.
Snoop doesn’t charge its users, instead it earns its money in three ways. Those using Snoop – also called Snoopers can choose to give Snoop a tip when they make a money saving. Snoop also earns income as a result of Snoopers taking a new product or service as a result of seeing this in the app. Finally Snoop helps other businesses to spot consumer trends in its anonymised data and charges a fee for this service.
Snoop uses Open Banking to power its money saving Snoops. This is a Government-sponsored initiative and uses the latest secure tech to keep your personal data safe. Snoop operates to the same high standards of security as your bank. Most importantly, you will never be asked to share your password or log in details of your bank or credit card with the app. Snoop also will never see these as a result of connecting your bank accounts and credit cards.
Snoop is registered with the Financial Conduct Authority under the payment services regulations so there are tight restrictions around data and how it operates in general.
Snoop was founded by ex-Virgin Money CEO Jayne-Anne Gadhia and John Natalizia. It went live with a customer waiting list in October 2019 before fully launching in April 2020. The senior team at Snoop has included many former Virgin Money executives including Ken Donald, Paul Lloyd, Scott Mowbray, Cara Norton, Paul Kerridge and David Dyer.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.