This is simply a percentage rate that shows how much you’ll earn once compounding (earning interest on interest) is taken into account. 

Compounding interest rates are generally better than fixed bonuses. With compound interest you earn interest on interest, with fixed bonuses you only get paid interest on the money you deposit into the account.

Banks might offer an account with a fixed interest rate, or a variable interest rate that they can change at their discretion.

The advantage of a fixed rate is obviously it won’t change, but banks often put some restrictions on withdrawals on accounts with fixed rate.

Whilst a bank can change a variable rate whenever they want (usually with a month’s notice), it means your rate can go up as well as down.

We pool your money with all Chip customers, so we negotiate with banks on your behalf, effectively enabling you to be treated like someone with hundreds of millions in the bank. 

Savings interest rates broadly follow the Bank of England’s Base Rate of Interest, which is a rate the UK’s central bank moves to influence the economy.

Generally when inflation is low and they want to stimulate the economy, the rate is lower, when inflation is high and they want to slow it down, the rate is higher. 

But savings rates are also influenced by the market and banks competing with each other for customers.