Chip - Interest can be paid away or compounded

Band7

Mine arrived sometime between 5pm and now.

Band7

piker57 said:

..... especially as I had to wait 3 days for a withdrawal, that they just blamed on a glitch, with no hint of an apology or sniff of compensation. 

I have made countless withdrawals since I first took out the account in December. Each and every single one has been instant. My linked account is Santander. What is yours? Have you raised a formal complaint with CHIP?

Band7

Email timestamped 18:38. 

Message to CHIP: Interest is not an award, it is earnt

masonic

I received an email titled "Your monthly interest payment is here", timestamped 18:15.

Dan29

Just received my email, timestamped 19:35.

AmityNeon

DuncanB123 said:

Chip - great at winning new customers with slick marketing, but poor communication/understanding once a customer eg autosave and how the market beating ‘instant access’ interest is applied

The initial delay (of 4+ days) is what causes the continual loss, but the loss itself remains relatively constant every month as the 'lost' days are recouped at the beginning of the next interest period. E.g. With the gross rate at 3.49% and an initial deposit of £82K, you would accrue about 10p less each month; the degree of loss doesn't compound to any meaningful extent within the balance limits permitted by the account's terms.

More precise AER figures would be 3.54637% (12 equal periods) vs 3.54512% (4-day delay). Depending on just how many non-working days are sandwiched in the delays, there's a chance the advertised AER of 3.55% (rounded up) would not be achieved.

Contrast this practice with the Club Lloyds account, where the interest period runs from the second working day of each month to the first working day of the next, but if a weekend happens to straddle two periods (e.g. between Friday 1st and Monday 4th), the weekend is still accounted for so there is no delay or loss of compound interest.

Yellowman

My monthly interest from Chip is about 20% less than it should be from my own manual calculations, but I cannot work out why.

Band7

AmityNeon said:

Contrast this practice with the Club Lloyds account, where the interest period runs from the second working day of each month to the first working day of the next, but if a weekend happens to straddle two periods (e.g. between Friday 1st and Monday 4th), the weekend is still accounted for so there is no delay or loss of compound interest.

I'm off to Lloyds then. On second thoughts, perhaps I'm not 🤣🤣🤣

AmityNeon said:

More precise AER figures would be 3.54637% (12 equal periods) vs 3.54512% (4-day delay). Depending on just how many non-working days are sandwiched in the delays, there's a chance the advertised AER of 3.55% (rounded up) would not be achieved.

Thanks for putting the loss into perspective with some real figures, though. I wonder whether anyone will challenge CHIP over it?

Yellowman

So, does a rate of x% at Chip produce less interest over a year than the same x% at another institution?

AmityNeon

Yellowman said:

My monthly interest from Chip is about 20% less than it should be from my own manual calculations, but I cannot work out why.

I was paid a £0.56 bonus payment on 11th Feb, after keeping £1 in the account from 1st Feb to 10th Feb, which completely contradicts their published communications:

For 1 - 10 February you will also accrue the 3% bonus and this will be awarded to your account on 11 February as a one-off final award before the change to interest.

It was then I realised interest periods run from the last day of the month, to the second-last day of the next, which then provided accurate figures for every bonus/interest payment before and after.

Yellowman said:

So, does a rate of x% at Chip produce less interest over a year than the same x% at another institution?

Marginally, literal pennies (~10p) a month even with £80K+ balances, and likely insufficient to lower their advertised AER within the standard two decimal point precision.