Over the last couple of years the ‘change saving’ apps have been popping up all over the place. Some of them operate as banks, others are simply granted access to your account and in return they start creating a separate in-app pot of change for you. And some of them are great, most of them work fine, and yet none of them I am interested in using. And here is why.
How the apps work
First things first. What are these apps and what is their purpose? The idea is simple – you make a purchase and the app looks at your transaction, rounds up your spending to the nearest full £ or $ and then takes the small change difference into a separate pot or a savings account. Some of the apps, once they understand your spending pattern, will also make a recommendation to you on how much you should be saving. It’s basically a silent helper stashing your change away into a digital account, instead of dropping it down the back of the sofa. The more sophisticated ones are able to learn your spending patterns and stash away larger sums too. Neat, right? Yes, I think so too.
And if you are looking for some which have been around for a while and are well established, these in the UK include Tandem, Plum, Money Box, Monzo (look up their Coin Jar if you bank with them) and even Lloyds TSB getting on the bandwagon and offering the same functionality as one of their auto-saving options.
Who the apps work for best
The apps are fantastic for people who need a helping hand or are unmotivated to save and budget. They’re also for people who like to put small amounts away and definitely for people who spend small amounts of money frequently. These apps can also be helpful to people who find it hard to budget at all or stick to a budget – the apps won’t do all the work for you but some work well learning your spending habits and making recommendations about how much you can or should save, and making the transfer for you.
Why they don’t work for yours truly
First of all, I don’t enjoy giving my account access to 3rd parties. While the security of pretty much all apps I listed seems solid, as does the security of my bank, in cases of fraud this would just be one more organisation to deal with.
Secondly, I am not a digital native, which means that I find the idea of my data being constantly analysed by a system naturally alarming and really off-putting. Yes, I use incognito mode, block cookies, refuse consent, limit my interactions with social media to things I am happy to share in a public domain and will come after you if you send me an unsolicited marketing offer.
Thirdly, I focus on paying myself first. The mechanism of the apps on the other hand focuses on ‘saving when spending’ and this has connotations with t’the more you spend the more you save’ which is illogical, and potentially a great way to establish bad habits.
Lastly, majority of the apps, unless they’re banks already, move the savings onto their own platform offering fairly minimal interest on the capital. I appreciate that you can’t do much with really small amounts, but with anything over £100 you would be able to put the money to better use.