When you think of the best app-based banks, Chase is a name that often comes up due to its decent cashback offer, competitive savings rate and fee-free overseas spending. But with yet another change to its perks - its savings account this time - does it still claim the top spot?
The latest change will see Chase’s easy-access savings account - linked to the Chase current account - tie its interest rate to the Bank of England’s (BoE) base rate.
This follows a recent shake-up in the eligibility of the 1% cashback, linked to the Chase current account.
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The JP Morgan-owned bank launched more than two years ago and reached more than one million UK customers in just 12 months. But according to the Current Account Switch Service, in the second half of 2023 Chase lost 1,020 customers.
Whilst its account perks attracted customers when the bank launched, these latest changes raise the question of whether its benefits are being watered down.
We look into how the Chase savings account will change, how it compares to the rest of the savings market and whether the Chase account is still worth it.
What are the changes to the Chase savings account?
Chase current account customers have access to its easy-access savings account - currently offering 4.1% AER.
Since the bank launched in 2021, it has prided itself on its savings offering and has set the interest rate based on the wider savings market.
However Chase has confirmed from 13 May 2024, the interest rate offered on its easy-access saver will be set at 1.15% below the BoE’s base rate.
So, depending on where interest rates go after 13 May, Chase will adjust the rate on its savings account accordingly.
The provider says any new rates will be applied to the saver five business days after the base rate announcement.
In another change that will come into effect on 13 May, Chase is set to increase the amount you can deposit into the savings account from £500,000 to £1million- and the headline rate is paid up to this balance.
How does the Chase savings account rank?
A base rate tracker in most cases is not a bad thing, as it aims to help time-poor savers bag a competitive savings rate.
But this really depends on the margin it sets below the base rate. Currently, the BoE's base rate is 5.25%.
The provider joins Wealthify, Co-operative Bank and Wombat in putting a base rate tracker in place. Here’s how they compare to Chase.
| Account | Current rate AER | Margin below the base rate AER | Withdrawals |
|---|---|---|---|
| Wealthify | 4.91% | 0.45% | Unlimited |
| Wombat | 4.91% | Up to 0.5% | One withdrawal per month |
| Co-operative Bank | 2.75% on balances between £10,000-£24,999. 3.25% on balances between £25,000-£49,999 | Balances between £10,000-£24,999 is 2.5% below base rate. Balances between £25,000-£49,999 is 2% below base rate. | Unlimited |
Currently, you can earn up to 5.2% on an easy-access savings account in the wider market.
So, Wealthify and Wombat’s base rate trackers remain slightly competitive, only 0.45% or 0.5% below the current base rate respectively- which brings them just below 5%.
Whereas the Chase saver will always be more than 1% below the base rate, which is considerably lower.
The demand for a base rate tracker last summer may have been high in the run-up to savings rates hitting its 6% peak.
But, with experts predicting that interest rates are set to fall this spring, a variable rate and base rate tracker might not be as desirable.
Sarah Coles, head of personal finance at Hargreaves Lansdown, says: “Variable rate savings accounts will tend to get less generous when the Bank of England is cutting rates, so in reality implementing a tracker may not have a wildly different impact.
“But, when the Bank is expected to start cutting rates in the next few months effectively means that the rate is almost guaranteed to fall.”
A common misconception when opting for a base rate tracker is that you don’t need to keep an eye on the wider savings market, as you’re ‘guaranteed’ a competitive rate.
“The general rule applies even with a tracker, when you’re rate falls, do a quick search on comparison sites to check it’s still reasonably competitive,” Coles advises.
Is Chase still the top app-based current account?
The main selling point of the Chase current account is its linked rewards and perks. But with some changes to those benefits as of late, is the account still worth it?
We already know what’s happening to its linked savings account. These are Chase’s other main offerings and we look at how they’ve changed over the years.
Cashback
Whilst the provider's notorious 1% cashback offer remains, it has more caveats.
- Last February Chase introduced a £15 cap- the maximum amount you can earn in cashback per month. This equates to up to £180 in cashback per year. When the bank launched, this was uncapped.
- From 28 February 2024, customers will need to pay in £1,500 a month into the current account to qualify for the cashback- up from £500 monthly. The new rule will affect customers at different times based on when your account was opened. Read more on your eligibility for the Chase 1% cashback offer.
Spending abroad
The Bank’s no-fee spending abroad policy has remained the same since it launched. It charges no fee no spending and cash withdrawals abroad.
On the Chase site, it clarifies that any purchases made in a local currency will have the Mastercard exchange rate applied to it- which is competitive compared with the wider market.
5% round up account
Chase’s 5% round-up account also remains. The idea is that when customers spend using the Chase current account, it will round the figure to the next pound, pay the difference into the round-up account, and this balance will earn 5% interest.
For example, if something costs £3.70, 30p will be added to your round-up account to take it to £4.
Are more changes to come?
MoneyWeek asked Chase whether we can expect more changes to its incentives.
Whilst Chase refused to comment, it did say, “over the long term we want to become the bank of choice for U.K. customers, offering a broad set of products which meets people’s financial needs.”
This comes back to the idea that digital banks want to become the preferred primary account for customers- which explains the change to its cashback rules.
£1,500 per month into the Chase account could be a salary for many or a big part of it.
But Coles says: “If you want cashback, Chase still has a very attractive option.
“Don’t forget customer service too – where Starling and First Direct tend to do well. Don’t assume that what’s right for someone else will suit you, because we’re all different when it comes to banking.”
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