Saving Apps

peteuk

I’ve seen a lot about savings apps which round up your spending and deposit the extra into a savings pot.  Are these any good or just a big con?

Pete 

JGB1955

I don't know which apps you're looking at, but I use Starling for my 'weekly pocket money' and any rounds-ups work exactly as I've set up - can be anything from 1x round-up to 10 x round-up - your choice.

RG2015

peteuk said:

I’ve seen a lot about savings apps which round up your spending and deposit the extra into a savings pot.  Are these any good or just a big con?

Pete 

It’s like putting your change in a jar at the end of each day, and having enough for a beer at the end of the month.

It may or may not work depending on your personality.

jimjames

I wouldn't say it's a con but pretty pointless. Just setup a standing order to the savings account and know what you're putting away

Nebulous2

I've never had much interest. I used to save coins, bag them and bank them when my container was full - but was never very enthusiastic about it. 

I've recently started the roundups with Chase, as they pay 5% interest. About 2 months in and I have £11.

If I leave it in for a year I'll get 55p. 

Not a life-changing sum...

blue.peter

jimjames said:

I wouldn't say it's a con but pretty pointless. Just setup a standing order to the savings account and know what you're putting away

I don't think that this will work for everyone. It certainly wouldn't for me, because my spending varies from month to month. For example, my TV licence falls due in February, so it reduces my funds available for saving by about £160 in that month. There are a few other similar one-offs, of varying amounts, that come up duringthe year.

My approach is to look at my income and predicted spending for each month (including credit card DDs), hold back a bit for ad hoc cash spending (e.g., haircut), and then sweep the remainder into my savings accounts before any spending happens. I do this once a month. AceMoney makes it simple: everything is set up on the Schedule page, so that it all appears as future transactions on each account page. All I have to do is look at the predicted balance at the end of the month, subtract the amount to be retained, and set up a faster payment for the difference to my savings account.

I do agree that bank accounts that automatically sweep look pretty pointless. Worse, they can actually create problems, depending how they're set up. For example, I receive my primary income on the last working day of the month. If the automatic sweep is also done at the end of the month, it might push my entire income into savings, leaving nothing available to pay the next month's bills.

blue.peter

And another thought...

If money is automatically swept into a savings "pot" or account, what's the rate of interest paid on the savings? Is it vaguely competitive (say, 1.3%+), or is it derisory (e.g., HSBC Flexible Saver is currently paying 0.10%)?

k_man

The main benefit of these savings plans, isn't the interest itself (which is low everywhere compared to inflation), and more to move it out of current accounts, to avoid the temptation to spend, rather than save, any money left at the end of the month.

blue.peter

k_man said:

The main benefit of these savings plans, isn't the interest itself (which is low everywhere compared to inflation), and more to move it out of current accounts, to avoid the temptation to spend, rather than save, any money left at the end of the month.

Yes, I understand that. However, if you want one of these accounts and are comparing similar products from two or more banks, would it not be sensible to compare interest rates?

k_man

It is part of the comparison, but even with good paying one (e.g Chase), the interest itself is minimal.
Features, ease if use, not take too much etc. are more meaningful.

For many savers, the aim is to put money to one side, for some point in the future.
Secondary is earn money on those savings (or not lose much through inflation)

So, at least when starting to save, it is better to have £200 of savings at 0.5%, than only £100 at 5%

Once users are following interest rates, they usually take a more hands on approach.

peteuk

Thanks everyone for the comments, will have a long thought.  

Ive tried the "penny" jar but don't tend to use cash that much.