What are autosaving apps?

 

Autosaving apps are a great way of budgeting for something and an easy way to save money without you really having to think about it. 

They automatically move money from your chosen bank account to a virtual savings account without you really noticing. 

What are autosaving apps?

These apps have been created to siphon off small amounts of your incomings into another virtual savings account without you noticing. 

They have been gaining in popularity over the past year and there are now a few apps on the market. Whilst the premise of them is the same, there are subtle differences between each one.

Some autosaving apps calculate how much you can afford to save each week by ‘watching’ you for a bit, tracking your spending habits etc before ramping up the activity. Others round up your purchases to the nearest pound and the difference will be saved. The theory is that all these pennies and small amounts of money will not really be noticed leading to a higher savings build up in the long term. 

Is an autosaving app right for me?

Before you make that decision, it is good to know a few things first.

The apps use open banking

What is this? 

Where the user gives the apps access to their existing online banking so information on your current account is seen. Banks have to comply now and must share that data with FCA authorised third parties once you have given your permission. Bear in mind that if you give permission for your bank to share your details with an unauthorised app then you are agreeing to take on any risk. 

The money accrued in the app may not be as protected as it would be in the bank

Money held in a UK bank is usually protected by the FCSC (Financial Services Compensation Scheme) up to £85k. This does not apply to the autosaving apps. Some do have that protection but some don’t. 

Autosaving apps offer little to no interest

This is why, as a general rule of thumb, if you are intent on using an autosaving app, any money accrued should be regularly moved to a savings account. Not only will it be protected by the FCSC but you will be gaining a small amount of interest on it too. 

Investments through the apps may not be all they seem

Some of the apps on the market allow you to make investments through them through funds. Sounds exciting because there is a possibility of growing your money faster, however there are risks associated with it and you could end up losing money if those investments turn out not to be so great. 

Advantages & disadvantages in a nutshell

Advantages

• They help you to gain good savings habits
• They can be a fun way to learn about money and savings
• Interest can be earned (although it is minimal)
• The money saved is held in a separate virtual account which helps reduce the temptation to spend it
• Helps to save with little to no effort from you

Disadvantages

• You need to own a smartphone
• Some of the apps do not have full FCSC protection which means that there is a risk with using them
• Little to no interest is offered

Some popular autosaving apps…

Plum

Moneybox

Chip

Cleo

Monzo

If you find saving each month difficult, then an autosaving app could be right for you. There are plenty of different apps on the market, just ensure that you are carrying out your due diligence before using one to make sure it is the right fit for you.

For more information on how to save, please read our blog post here.

Have you been using an autosaving app? Let us know how you’re finding it!