Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
The best standalone savings apps in 2023
Daniel Bostock
27th Jan 2023
Savings apps are becoming more popular – but who should use them and which is the best? This guide helps you decide if savings apps are best for you.
Do you have big plans and great ideas for your money? A holiday, a new car, a deposit for a new flat or even something as simple as a big night out with your friends can all be a great savings goal.
We’ve all been there, all of the dream boards and plans of grandeur that fall by the wayside because saving is hard. The old faithful change jar just isn’t going to cut it – especially in an increasingly cashless world. Well, there’s an app for everything these days and maybe one of them is the answer to your saving needs.
Savings versus inflation
When thinking about saving money, you have to also think about inflation and how that will affect your savings in the long run. This is especially important now when inflation is so high. Inflation makes a big difference on whether you’re going to make a profit. Say you put your money in a bank account that pays you interest at 2%. A year later you’ll have 2% more money – great, right? Not really!
If inflation is higher than 2% in the same year, you’ve actually LOST spending power on your money. Unless your savings interest rate is the same or higher than inflation, what you could’ve bought for £1 last year might cost £1.20 the next year. If your interest means your £1 saved is now worth £1.02, you’re 18p down on every pound saved.
However, don’t let that put you off saving! Having an essential emergency fund for unexpected costs – or to pay for your dream holiday – is a vial part of money management. At the moment, savings rates are all atrocious – so it’s all about finding ways to save that are convenient and simple to do. That’s where savings apps come in!
Is my money safe with an app?
Savings apps that offer interest or investments are regulated by the Financial Services Compensation Scheme (FSCS) or the Electronic Money Regulations (EMR). Both of these schemes protect customers of financial firms that have failed.
You need to make sure that if you have savings above £85,000 you spread them across different banking groups. This protects you under the FSCS scheme – anything above that in the same banking group won’t be covered.
However, with standalone savings apps, they’re a slightly different tool. Your money may not be protected in full – but you can easily access it and transfer it at any time. Many savings apps are also linked to ‘ring-fenced’ high-street bank accounts. This means your money goes into the bank account with the FSCS-legislated bank, who can’t use those funds for any investments. Your money sits there in the bank account ready for you (and often protected) when you need it.
We already have some articles on how to make money using apps, but now its time to show you how to put that extra cash to use.
Moneybox
One of the biggest names in savings apps is Moneybox. But what do they offer that others don’t? It’s the flexibility of options available. You can choose from:
- A Lifetime ISA account, for first-time buyers or retirement savings (including a 25% Government top-up bonus)
- The 95 day notice account for short-term savings goals
- An equities ISA to invest in the stock market
- A pension plan for long-term retirement planning
- A junior account to save for your children
You simply have to connect your current account to the app and you’re good to start saving. From penny round ups to full pound round ups (spend £7.10 and it will round up to £8 for £0.90 saved) and allow you to save the roundups manually or automatically.
You’re allowed one of every account if you like! It’s easy to save money as and when you like, with separate direct debits for each account you hold with them.
With Moneybox being protected by the FSCS your money is protected up to £85,000.
Plum
Plum takes a similar, yet different approach to the savings app package.
Whilst penny-pinching and investments are both available with Plum, they hold the money in an e-money account. This means they are not protected by FSCS but instead by EMR. Fret not: if they do go bust you will still get your money back.
Plum accounts are a good way of creating a habit to budget, and squirrel away pennies each month to slowly build a savings pot (that you could then transfer into an interest-paying account when the time’s right).
The Easy Access Interest Pocket provides an interest rate of 1.95% AER variable for Plum Pro or Plum Ultra subscribers, and 1.5% AER for Plum Basic customers. Those on the Premium Plan can enjoy an interest rate of 2.45%. The Interest is calculated daily on the cleared balance in the account using the interest rate applicable on that day and is paid into the Interest Pocket monthly.
Plum also keep an eye on your monthly bills, and offer a quick switch service to keep you on the best deals for energy and other utilities.
Hyperjar
Savings apps don’t come much simpler than Hyperjar and that isn’t a bad thing!
Unlike other apps, there’s no roundup feature. Instead, you transfer money in yourself to different jars as and when you like. You’ve got full control – and it’s not linked to your spending, so if you can’t manage those auto-roundups, you don’t need to worry!
Hyperjar adds a new dimension to the savings app game by offering shared jars; these are Hyperjars instant joint accounts. These can be set up between you and your friends or family to split and pay bills, or save for a special occasion.
They also offer a unique feature called a Merchant jar. This jar must be allocated to one of their partners such as Lidl, Feel Unique, notonthehighstreet, Shell and many more. This pot is almost like a grow-your-own-gift-card for your chosen store and accrues a 4.8% reward per year. You can only use the money set aside for the chosen store only and cannot be turned into cash. Take a jar allocated to Lidl for example. You may decide to pay in small amounts here and there through the year until Christmas comes around, and you have a little extra cash for your shop.
There’s no risk of losing your money as HyperJar don’t invest your cash. It’s a tool to help you divide your money to help you budget better!
Cleo
Cleo has a more informal and fun approach to the savings app meta. Marketing themselves as “The intelligent assistant for your money”, Cleo offers a fun and informal way to help you save and budget your cash. And let’s face it, who amongst us can honestly say they have never wanted to be insulted by a robot for our spending habits? It’ll certainly keep you on your budgeting toes!
While all the other apps so far offer their own savings or investment accounts, Cleo don’t. So don’t expect any interest because you’re still only using your regular current account. Instead, what it does offer is advice and a helping hand. Cleo will budget for you and put money aside. It notifies you when you’re close to your overdraft and much more.
Unsure if you can justify that third takeaway this month? Ask Cleo and they will give you an answer based on how much money you have left, when your bills are due and how long until your next payday.
Ask a question
Do savings confuse you – or do you want to know more about different account types? Have you got your eye on investing but you’re not sure where to start? Perhaps you want to know how to make extra cash to build your savings pot.
Jump on over to our messageboard and ask your burning question!
Idea of your money being protected is great, the danger is how it is being utilized in other words ethically is another matter of discussion.