Mobile Banking - Where to Save?

An easy way to understand savings apps is to divide them into two main types:

1) “Analyser” apps regularly auto-save an amount that you or the app decides on. 

2) “Difference” apps work by rounding up the difference on any transactions you make and saving the difference.

 

“Analyser” savings apps:
Some savings apps – like Chip and Plum – work by estimating how much you can afford to save, and making regular, agreed transfers from your current account into a savings area. With Chip, this savings area does not offer interest; with Plum, you have a range of risk-based investment options that do offer interest.

 

“Difference” savings apps:

Tandem, Monzo and Moneybox all work by rounding up your card purchases to the nearest pound/dollar and turning the difference into savings. 

Where these “difference” apps differ is what happens to the money that is automatically saved. Tandem puts the money in a Tandem savings account paying 0.5% interest. Monzo simply stashes the cash in “pots” that you allocate, but offers no interest. Moneybox places the surplus in one of 3 Moneybox ISAs rated by risk. 

 

Name: Tandem.
Services offered: Auto-saving linked to in-house savings account.
Cost: Free.
Safe?: Covered by FSCS up to £85k.
Years in business: 5.
Customers: 500,000.
How it works: Tandem rounds up spending from your debit card to the nearest pound and puts the difference into a Tandem savings account automatically.
Interest paid on savings: 0.5%
Ease of withdrawal: Any time.
What Tandem says: “Set up Autosavings in under 10 minutes and relax while it does the hard work for you.”

 

______________________________

 

Name: Monzo.
Services offered: Auto-saving with “Coin Jar” linked to Monzo current accounts.
Cost: Free.
Safe?: Covered by FSCS up to £85k.
Years in business: 2 years with current accounts, 1 year with Coin Jar.
Customers: Over 1m.
How it works: Monzo is an online current account provider. Monzo also offers an auto-savings option called Coin Jar, which is linked to your Monzo current account. Monzo rounds up purchases you make from that account and automatically places the difference in a “pot”. You can set up several pots to cover different financial goals (one pot for the family holiday, one pot for the school fees etc.).
Interest paid on savings: 0%.
Ease of withdrawal: Any time.
What Monzo says: “For instant spending notifications. Fee-free spending abroad. Easy budgeting tools. And friendly help from real people all day every day.”

 

______________________________

 

Name: Moneybox
Services offered: Auto-saving linked to an in-house ISA
Cost: No subscription fee for first 3 months, then £1 a month plus platform and fund fees
Safe?: Covered by FSCS up to £85k
Years in business: 3 years
Customers: 150,000
How it works: Moneybox will round up your daily purchases and place the spare in one of 3 in-house ISAs rated cautious, balanced and adventurous.
Interest paid on savings: Depends on ISA
Ease of withdrawal: Up to 2 weeks
What Moneybox says: “So far we’ve helped over 150,000 people. Ready to join us?”

 

Savings apps – are you open or closed for business?!

We’ve got Open Banking to thank for savings apps. Open Banking is the new system in the UK which you can opt into which shares your banking information with third parties. The idea is to give you more options and ensure you don’t get trapped in unfair deals. But some consumers fear for the safety of their data. 

If you don’t fancy sharing your financial details with a third-party, be aware that some of the big banks (Lloyds and TSB for example) offer in-house auto-saving schemes.

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