Last Updated on 12 April 2021 by Dan
Hello everyone! Today I’m going to be reviewing the Plum App and running through my experience now I’m a couple of weeks into using it. I’m helped by the fact I’ve been put in a good frame of mind when writing this as I’ve just consumed one of the real-life variety before writing this and it was really juicy and sweet. Mmmm….
I’ve actually got a confession before we start, and some of you may judge me for it – I’ve never actually used a money management app before. I’m one of those people (ahem, some may say sad) who keeps a close eye on exactly what’s going in and out of their bank account so I’ve simply never felt I’ve needed one.
There’s plenty of them out there now though and I’ve always been rather curious about them, so downloading Plum was a good way to satisfy that curiosity! Let’s see how I get on…
(Affiliate Disclosure: Please be aware this post is sponsored. Plum hasn’t paid me directly for this post, but did ask me to review the app, and if you sign up through my link below I will receive a small payment. We know our genuine opinion on if you should give your money or time to a service is highly important, and per our editorial policy you’re getting our genuine opinion without adjustments by Plum, except a check to ensure sure financial promotion rules are complied with).
How Plum works
Plum is one of the new wave of FinTech apps which have started up to make use of the Open Banking initiative. This basically allows companies to have read access to your bank accounts to help provide innovative financial services.
In the case of Plum, it uses the principles of behavioural psychology to work on the basis that most people by and large mean to save and have good intentions, but often require a little push to actually get there.
What the Plum app actually purports to do is examine your transactions, and work out from your ingoings and outgoings what’s a reasonable amount to set aside every 4-5 days without putting yourself under financial stress.
It largely works through the principles of a chatbot, where you’ll swap messages with Plum and control it’s “Brain” for various aspects of automated decision making (like if you might like to purposefully stash away a bit extra right after you’ve been paid).
Finally, the app includes functionality to allow you to undertake various other money saving activities relatively easily, such as changing your energy provider.
Is Plum worth it for setting money aside?
Yes and no.
In terms of the positive, the best money saved is the money you actually do put aside, which is the problem for most people – they simply never get round to it. The app is absolutely excellent at providing those reminders and actively encouraging you to do so. As such I think this really is a worthwhile tool for those who really struggle to remember to set money aside (for a rainy day).
I like the concept that Plum is analysing your money and working out exactly what’s a good idea to set aside. Whilst any amount that came up for me was sensible but I often found myself wondering exactly how it was calculated.
Where we’re a touch hesitant to get fully on board is because of the interest rate, simply as we’re advocates of getting the absolute maximum of out of your cash. You get no interest back on money set aside within Plum unless you move your money purposefully into an interest Easy Access pocket – (which seems an unnecessary hoop to jump through rather than giving you the interest by default).
Plum is rolling out interest-generating “pockets” for those who use the free version of the app as well, however this pays on 0.25% interest. Whilst this is a better rate to what many banks are offering, you could improve on that if you go for the do-it-yourself option and make a regular transfer to a higher interest saving account (about the best rate you’re getting right now is 0.4%)
Note: The interest rate on Plum standard changed from 0.35% to 0.25%, on 01.02.2021, which this article was changed to reflect.
The flip side is that you wouldn’t have the advantage of Plum determining what a sensible amount to stash away would be – you’d have to either set a fixed value or adjust it yourself. There are pros and cons to each option, and neither are bad choices. You just need to think about what you want to manage!
Is Plum Plus worth it?
You do get a slightly higher rate of interest of 0.4% if you upgrade to Plum Plus (£1 a month) – upgrading to Plus specifically for the interest only becomes worth it when you’re over £8,000 worth of savings (as when the extra interest covers the cost of the upgrade).
Note: The interest rate on Plum Plus changed from 0.55% to 0.4%, on 01.02.2021, which this article was changed to reflect.
Is Plum Pro worth it?
For £2.99 a month you get access to some additional functionality with Plum Pro, like the ability to create pockets to set aside money for specific things, to have money stashing challenges or to put away extra money on rainy days. I thought these were largely shiny things that didn’t add anything, and you’re better saving the money you’d otherwise put into Pro!
Can Plum do anything else?
It provides a further conduit for saving money via helping you to switch utilities, and comes up with several good ideas to do so.
This is something I’d always advocate trying to do yourself, because you can get some extremely generous cashback deals but doing so (I’m about to get an extra £75 from doing my broadband!) – however if you want the easy option, it’s a good framework to make it easy to do so.
A cashback portal is also offered for Plum Pro customers – each time I looked at a retailer the payout rate compared unfavourably to using TopCashBack (which you don’t pay for to begin with!) so I would simply advocate using them instead. (You can read about why I rate TopCashback here.)
Is Plum Safe?
There are two aspects of safety that may immediate spring to mind when we speak about money management apps:
Is my money safe if Plum went bust?
Let’s start with if you have your money in an interest bearing easy access account as that’s the easiest thing – it’s a clear yes. Rules around this mean that your money is held in a trust named to you, meaning you still have ownership of the cash if the firm went under.
If you have cash with Plum in a non-interest bearing pocket it’s held instead in an “e-wallet”. Generally speaking this is safe as well as Plum don’t lend out your money and it’s in a bank account with their partner organisation, but it’s not covered by the Financial Services Compensation Scheme as a bank account would be. It’s theoretically allocated to you, but would need to be formally redressed to you by the firms administrator so is a little more uncertain.
I’d obviously advise simply having any money with Plum in interest bearing pockets – as much as because it’s financially sensible as to maximise protection!
There are some additional notes which Plum has asked be listed here for compliance purposes:
- Interest is calculated daily but is applied to your account monthly.
- The provider of the interest bearing accounts has the right to change the rate of the interest.
- If you would deposit £1000 into your savings account, without adding or withdrawing any money throughout the year, you would have a predicted £1035 in your account at the end of the year (at 0.35% interest).
- Minimum amount to open an interest bearing pocket is £0 with limit to the amount to be deposited into the account. Please bear in mind that your money is protected under the FSCS up to £85000.
Use of Open Banking
The first is the use of Open Banking to share details from your account. In terms of the mechanics of this, all your provide is read only data – I.E it’s the equivalent of letting the app take a peek at your statement for a short period of time which you must re-permit each 90 days – you don’t give any access to the actual management or login of your bank account.
Remember – you should NEVER give any app or any person any of your account login details directly.
Therefore the potential direct harm or someone to make malicious transactions/steal your money is limited, however in a more general sense you should think carefully about who you provide even read-only access to. In the wrong hands it could provide a fraudster or hacker with data on your spending that could help them commit identity fraud.
Overall review of Plum
The value of Plum is really in it’s ability to nudge. It’s to change what’s a good intention into actual reality. Those who’ll get most benefit out of it are those who mean to set money aside and then don’t.
The other group that will really benefit from this are those who would like to save but worry about not quite having enough to meet bills etc. – the Plum algorithm is clever in working out what’s appropriate and giving you control that you don’t go overdrawn.
If you fall into these categories, Plum is an app well worth using – it can help turn an intention into a habit.
For those who are more experienced with where they put their money and are confident in monitoring their finances themselves, I don’t think there’s enough here to give you benefit over simply doing what you’re doing.
And that’s it!
Thank you for reading! If you have any further questions about Plum or have your own experiences using the app then please let us know by using the comments below.