Chip Prize Savings Account review: I saved £100 and won £25

This post was originally published in November 2023. It was updated in July 2024.

Savings and investment app Chip has some of the best interest rates around at the moment.

Their Instant Access Savings Account* for example currently offers a healthy rate of 4.84% AER.

This is far above many high street banks, which is why it’s been on Money Talk’s Best Buy list for as long as I can remember.

Chip has another account that might be of interest to some savers: its Prize Savings Account*.

Relatively new to the market, it’s one of the many savings accounts with a prize draw element.

In 2022, I saved £100 as an experiment – here’s how it went.

How does the Chip Prize Savings Account work?

The Chip Prize Savings Account* sort of works like NS&I’s Premium Bonds.

You have to deposit a minimum of £100 into the account, and maintain this balance throughout the month to be entered into the monthly prize draw.

While each £10 equates to one entry into the prize draw, how many entries you get each month actually depends on your average balance for that month.

So the more money you save, and the earlier you save it, the more entries you get. And more entries mean more chances of winning.

Here’s Chip’s example:

If you deposit £1,000 on the first day of a 30 day month and hold it for an entire month, the average balance for the month would be £1,000 gaining you 100 entries in the prize draw.

If you deposit £1,000 on the 20th day of a 30 day month, your average balance will be calculated off 20 days of a £0 balance and 10 days of £1,000.

This would give you an average balance for the month of £354.84 which would get you 35 entries in the draw.

However, the maximum amount of money you can save is £85,000, which is the equivalent of 8,500 entries. And you’re only allowed one account.

The winners are randomly selected using a third-party software, and you’ll be notified if you win.

How much can you win?

As of July 2024, Chip has increased the size of its prizes but reduced the number of prizes.

Each month there’s one big prize of £75,000, followed by a smaller prize of £10,000.

In addition, there are 250 prizes worth £10 each.

It’s also possible to win more than one prize each month.

Previously there was one big prize of £10,000, plus 50 prizes worth £100, 100 prizes worth £50, 500 prizes worth £25 and 4,250 prizes worth £10.

What are the odds of winning?

The odds of winning with a Chip Prize Savings Account* obviously depends on how much you have saved, and how much other people have saved.

However, since the number of prizes were reduced in 2024, the odds of winning has also fallen. Chip itself has stopped releasing the odds of winning.

According to its previous calculations, you had a

• 1 in 1,059 chance (0.1%) of winning something with every £10 entry.
• 1 in 2.7 chance (37%) of winning something if your average balance is £5,000.
• 1 in 1.6 chance (62.5) of winning something if your average balance is £10,000.
• 1 in 1.19 chance (84%) of winning something if your average balance is £20,000.

These odds were calculated using data from August 2023.

For comparison, NS&I currently gives the odds for winning in Premium Bonds as 1 in 21,000 for every £1 saved. Again, this is variable.

Are there any downsides?

Like NS&I’s Premium Bonds, no interest is paid on the savings balance.

It means that if you don’t win anything, you’re basically losing money due to inflation.

That said, many of those in the financial independence, retire early (FIRE) movement uses Premium Bonds as a safe place to put their emergency fund – any prizes are tax-free – and there’s no reason not to use the Chip Prize Savings Account* in the same way.

Any money you deposit is protected by the Financial Services Compensation Scheme (FSCS) up to £85,000, hence why this is the maximum amount of money you’re allowed to deposit.

Another thing to bear in mind is that if you do win, the money is shown as “prize” on your account. It doesn’t become “money” until you cash it out.

That means prizes don’t count as additional entries into the prize draw, nor is it protected by FSCS.

In other words, if you’re lucky enough to win, cash out that money as soon as possible.

My experience with Chip Prize Savings Account

At the beginning of November 2022, I saved £100 into the Chip Prize Savings Account* – the minimum amount you can save and still be entered into the draw.

Interest rates were still pretty mediocre at the time. At the beginning of November 2022, the Bank of England Bank Rate was still 2.25%, rising to 3% by the middle of that month.

It meant that after saving £100 for a year, I would only have earned about £3 in interest.

Happily, my investment into Chip Prize Savings Account* turned out to be much more profitable.

After 12 months, I won a single prize of £25, or the equivalent of 25% return – much more than I’d have ever managed with a regular savings account.

It was a pleasant surprise – I never expected to win, and to be honest I had to double check it wasn’t a scam.

Final thoughts on the Chip Prize Savings Account

I think it’s quite telling that I’ve kept my original £100 in the Chip Prize Savings Account*.

That said, I’ve withdrawn my winnings and I’m not planning to put any more money into the account.

Interest rates are pretty good these days.

Although winning anything on my £100 investment would beat the returns from a typical savings account, I like the certainty of interest returns.

But if I had so much cash that I’ve filled my ISA allowance for the year, I may just consider it as an alternative to a savings account.

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