With the Chip Instant Access account and the Chip Cash ISA both having tracker rates, it's important to understand what this means and how your returns are affected.
The Bank of England (BoE) base rate
The Bank of England base rate is the interest rate at which the BoE lends money to commercial banks. It serves as a benchmark for all other interest rates in the economy, influencing the rates at which banks offer their lending and savings products.
The Bank of England sets the base rate based on economic conditions, inflation targets, and other factors.
Tracker rates are directly linked to the Bank of England base rate because your rate will move up or down when the BoE base rate does.
What are tracker rates?
There are three main types of interest rates for savings and loans; variable, fixed and tracker.
Tracker rates are directly linked to the Bank of England base rate at a predefined margin and are common with mortgages and savings accounts.
For example, if a product has a tracker rate that is “BoE base rate minus 1%”, it’ll always be 1% under whatever the base rate is. So, if the base rate is 5%, the tracker rate will be 4%. But if the base rate increases to 5.5%, the tracker rate will pay 4.5%, and should the base rate reduce to 4.5% the tracker rate will pay 3.5%.
An advantage of tracker rates is that your rate will reflect wider market conditions, and you can effortlessly ensure that you're getting a competitive rate.
Tracker rates at Chip
The Chip Cash ISA and the Chip Instant Access account have tracker rates. You can see the current rate in-app by going to the 'Savings' tab and clicking on the relevant account.
Your rate will change whenever the Bank of England base rate changes. When the BoE base rate moves up or down, your savings rate will move on the same day.
The Chip Cash ISA has a gross rate that tracks the Bank of England base rate minus 0.26% and the Chip Instant Access account has a gross rate that tracks the BoE base rate minus 0.51%.
Please bear in mind that we show all rates using industry-standard AER, meaning the rate you will see on the account will always be slightly higher than the gross rate, as AER reflects the effects of compounding.
Contact us
If you have any questions, please don't hesitate to reach out to us at hello@getchip.uk or via the in-app chat that can be found on the Profile tab.