Chip Smart Cash ISA - Beware this condition...

sweaty_doughnut

Just to add here, for everyone affected, raise this to FCA not only FOS. Use ChatGPT/Gemini to write complaints in minutes. FCA reacts when there are lots of complaints. It's also worth reporting to ASA for misleading marketing as they say "no trick, no gimmicks" and similar language and then you lose interest at the end.

From my research each defended FOS case by the business costs them ~£500 so I believe a pressure in this way can force them to change the terms to be fair for consumers.

Their rating is still pretty high on Trust Pilot which I believe it won't be for long once people realise how much money they will lose.

My wife has started a FOS case for her savings account. I will issue MCOL once I crystalise the loss and let the judge decide if terms are fair.

I am surprised that MSE still promotes Chip given that everyone will eventually transfer out and will be worse off than if they went with the competitor at the next best interest rate.

I have done an illustration of the loss at 100k and interest rate of 4.7% with Chip vs second best well known name at 4.30%:

On £100,000, with Chip at 4.70% against a penalty-free competitor at 4.30%:

Leave after	Chip, best timing (14 days lost)	Chip, worst timing (43 days lost)	Competitor, no penalty
3 months	£995	£621	£1,075
6 months	£2,170	£1,796	£2,150
12 months	£4,520	£4,146	£4,300

What the numbers show

• Chip’s higher rate is worth about £400 a year on £100,000.
• The exit penalty costs between about £180 (14 days) and £554 (43 days).
• Leave within about 5 months, and you’re worse off than with the competitor, whatever your timing. That’s how long it takes the rate advantage to cover even the minimum penalty.
• After 6 months or a full year, the outcome depends on the date your transfer completes. At 12 months, good timing leaves you about £220 ahead, while bad timing leaves you about £154 behind.
• The worst-case penalty equals almost 17 months of Chip’s rate advantage, but the boost lasts only 12 months.

Jaunty

l see MSE now caveat the recommendation with notice of the penalty. That information certainly wasn't there when I took out my Smart Cash ISA.

friolento

https://forums.moneysavingexpert.com/discussion/comment/82199180#Comment_82199180

It was always there in the T&Cs though. In all instances, we are responsible ourselves for accepting the T&Cs of a given product. It's good, though, if MSE highlight pitfalls where they are aware of any.