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