Chip 3% App

aj23_2
aj23_2 Posts: 1,155
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edited 11 July 2018 at 10:55AM in Savings & investments
How does this actually work? So you can put up to 10k in it, but can only save manually up to £100 a day, six times a month, so £600 a month. That's 7200k over 12 months, after which is goes back to 0% ?

It says interest is paid quarterly, so I'm assuming you get a payout of 3% on what you have saved into each three month period?

£1800: £54
£3654: £109.62
£5583.62: £167.50
£7551.12: £226.53

Giving you a balance of £7777.65 at the end of 12 months

Sounds too good to be true? Or does it work like a regular saver in which you get 3% on the average balance?
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  • Paul_DNAP
    Paul_DNAP Posts: 751
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    edited 11 July 2018 at 10:12AM
    Interest is calculated daily, using a daily rate that would add up to 3% APR. (So yes, like the regular saver thing).
    You don't get 3% on top of the amount added in each transaction, and you don't get 3% each quarter (you could estimate it at 0.75% on top of each quarterly balance as 4*.75 = 3 but the exact interest will depend on the exact date within the quarter each individual credit was made.)
    (Although I could be wrong, I often am.)
  • aj23_2
    aj23_2 Posts: 1,155
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    Paul_DNAP wrote: »
    Interest is calculated daily, using a daily rate that would add up to 3% APR. (So yes, like the regular saver thing).
    You don't get 3% on top of the amount added in each transaction, and you don't get 3% each quarter (you could estimate it at 0.75% on top of each quarterly balance as 4*.75 = 3 but the exact interest will depend on the exact date within the quarter each individual credit was made.)

    So what could you expect to get on a deposit of £1800 every three months for 12 months?
  • Zanderman
    Zanderman Posts: 4,643
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    aj23 wrote: »
    So what could you expect to get on a deposit of £1800 every three months for 12 months?

    Your original calculation is way out.

    I think it would be best to forget the quarter bit.

    You're talking of depositing £600 per month - so work it out as if was a reg saver that you were paying into to on one day per month (it will be slightly less as it's actually £100 per day over 6 days) - and use the calculator here: https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/#calculator

    Which tells you the interest earned would be 116.47 if earning 3%.

    That's the equivalent (if you'd put the whole £7200 into one account at the start of the year) of 1.6%, so not actually particularly good. You'd do better with other accounts.

    That's IF your Chip account is at 3%. They start at 0% and you get 1% increments up to 5% if you earn referrals. So not all Chip accounts earn 3%, many earn less.
  • I took this offer up December last year and the way interest is paid is quarterly but worked out weekly.

    I pay £400 manually every month but the money doesn't clear into the account very quickly and so doesn't earn interest straight away. You request the save and then it take 3 working days to debit your bank account and then sometimes takes a week to clear into your Chip account i.e. my debit from 5/7 still not cleared today.

    Interest that I have earned is 1st quarter 1/4 £7.19 and 2nd quarter 1/7 £16.23. Interest is normally applied Monday weekly so you can check amount given matches to what you work it out to be, I work mine out by simply total amount in account x 3% divide by 52 and it always matches.
  • aj23_2
    aj23_2 Posts: 1,155
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    Zanderman wrote: »
    Your original calculation is way out.

    I think it would be best to forget the quarter bit.

    You're talking of depositing £600 per month - so work it out as if was a reg saver that you were paying into to on one day per month (it will be slightly less as it's actually £100 per day over 6 days) - and use the calculator here: https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/#calculator

    Which tells you the interest earned would be 116.47 if earning 3%.

    That's the equivalent (if you'd put the whole £7200 into one account at the start of the year) of 1.6%, so not actually particularly good. You'd do better with other accounts.

    That's IF your Chip account is at 3%. They start at 0% and you get 1% increments up to 5% if you earn referrals. So not all Chip accounts earn 3%, many earn less.

    Well that's why I asked. Using the MSE code it's 3% straight away. So that's why I incremented it at 1800 every three months as interest is paid quarterly. But if it works more like a regular saver in that you get 3% on the average balance, it would be about 3600 you'd get 3%, no?
  • Riff_Raff
    Riff_Raff Posts: 38
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    How much control do you have over the automatic sweep function? Can you turn that off completely?
  • DennisTenus
    DennisTenus Posts: 483
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    Riff_Raff wrote: »
    How much control do you have over the automatic sweep function? Can you turn that off completely?

    I was wondering this too but I guess it allows you to save more than £600 a month?
  • Zanderman
    Zanderman Posts: 4,643
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    aj23 wrote: »
    Well that's why I asked. Using the MSE code it's 3% straight away. So that's why I incremented it at 1800 every three months as interest is paid quarterly. But if it works more like a regular saver in that you get 3% on the average balance, it would be about 3600 you'd get 3%, no?

    Er, No! How on earth would you get £3600?

    The 3% is an annual interest rate. Forget quarterly interest payments. The rate is annual.

    You're depositing £7200 gradually over a year. So it gradually gets interest, with the full 3% only on the very first part of the deposit. The later deposits get a progressively smaller proportion of 3%. Simples.

    I've already shown you how to calculate the interest and how much you'd get. What is the problem?
  • Zanderman
    Zanderman Posts: 4,643
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    Riff_Raff wrote: »
    How much control do you have over the automatic sweep function? Can you turn that off completely?
    I was wondering this too but I guess it allows you to save more than £600 a month?

    It can be turned off for set intervals, the longest being 90 days. So to keep it off all the time you have to reset it to off every 90 days.

    Not sure what it will do if you manually save the max 600 in any given month. Perhaps it won't autosweep anything in that month.
  • aj23_2
    aj23_2 Posts: 1,155
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    Zanderman wrote: »
    Er, No! How on earth would you get £3600?

    The 3% is an annual interest rate. Forget quarterly interest payments. The rate is annual.

    You're depositing £7200 gradually over a year. So it gradually gets interest, with the full 3% only on the very first part of the deposit. The later deposits get a progressively smaller proportion of 3%. Simples.

    I've already shown you how to calculate the interest and how much you'd get. What is the problem?

    I said that if it works like a regular, you'd get 3% on about 3600, the average balance. I did use the calculator. I didn't say there was a problem?
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