.avif)
Tracker Rates Explained
You might have noticed that the Chip Cash ISA, Chip Easy Access Saver and Chip Instant Access Accounts have rates that track the Bank of England base rate.
Here we explain what the base rate is, what tracker rates are and how they work at Chip.
Bank of England (BoE) Base Rate
Often simply referred to as the 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 for their lending and savings products.
How and when the base rate changes
The Monetary Policy Committee (MPC), a group within the Bank of England, sets the base rate based on economic conditions, inflation targets, and other factors.
You can find a timetable of all MPC meeting dates on the BoE website, but these meetings are usually widely reported on in the media, with the results usually shared instantly by the major news outlets, and MPC meeting notes are a matter of public record.
The main aim of changing the base rate is to control inflation. If inflation is rising above the target set by the government, the BoE may raise the base rate to make borrowing more expensive and encourage more saving. But if the economy is slow and inflation is below the target, the base rate may be lowered to encourage borrowing, spending, and investment.
Tracker interest rates in theory
First thing to cover is that there are three main types of interest rates for savings and loans; variable, fixed and tracker.
Variable rates can be changed at any time at a financial institution’s discretion and fixed rates are contractually set for a defined period of time.
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%.
However, it is worth noting that a tracker rate can also be a variable rate, as they are at Chip (see more on that works below).
How rate boosts work with tracker rates
If you are earning any of the boosted rates in the tables below. your boosted rate is applied on top of the underlying rate for the duration of the rate boost, regardless of what happens to the underlying tracker rate.
However, it's important to note your underlying rate as a tracker rate will still move in line with the BoE base rate.
BoE rate drop example with a 0.11% boosted rate on the Chip Cash ISA;
Should the base rate drop from 4.75% to 4.50%; the underlying gross rate on the Chip Cash ISA would drop from 4.49% to 4.24%, taking the AER to 4.32%; but if you have a 0.11% boost applies, your AER would be 4.43%.
A rate that moves with the Bank of England
One 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.
This is because, as explained above, the BoE base rate influences all other rates in the UK and when the base rate moves it’s likely other variable rates will too.
How variable tracker rates work at Chip
With a variable tracker rate we reserve the right to change the margin that our accounts' rates track the Bank of England base rate by.
If we change the margin to effectively lower a rate (i.e. make the margin bigger), we will give you at least 14 days' notice.
If we change the margin to effectively raise a rate we will put that into effect immediately.
Gross rate vs AER
AER is the rate of interest you earn on any balance above £0. It stands for Annual Equivalent Rate and shows the interest rate for a year, and reflects compounding (earning interest on interest), taking into account any interest payments made to you during the year.
For example, with a 4.50% AER interest rate, if you put in £1,000 on your first day, you'd earn £45.00 in interest over the year. If nothing changes (including the interest rate), you'd have £1,045.00 at the end of the year.
AER enables you to compare the interest rates on accounts from different banks and building societies where interest may be calculated or paid at different frequencies.
Gross interest is the rate you’ll earn before compounding is reflected. UK bank interest is paid gross. For example if AER is 4.58%, the gross interest rate is 4.49%.
Tracker rates at Chip
The Chip Cash ISA, the Chip Easy Access Saver and the Chip Instant Access Accounts have tracker rates.
The rates on these accounts will change on the same day that the BoE base rate moves.
Here’s a quick summary of how they work, and how they could change with different BoE base rates.
Chip Cash ISA variable tracker rates
The gross rate tracks the Bank of England base rate minus 0.26%. The current base rate is boe-base-rate, this means; The gross rate on the Chip Cash ISA Account is cisa-gross-rate. This gives you a cisa-headline-rate AER (standard rate).
See below tracker rates for recent Chip Cash ISA Promotions:
Underlying AER of the Chip Cash ISA Account
| Bank of England Base Rate | Gross Rate | Underlying AER |
| 4.50% | 4.24% | 4.32% |
| 4.75% | 4.75% | 4.58% |
| 5.00% | 5.00% | 4.84% |
| 5.25% | 5.25% | 5.10% |
+0.11% promotional rate boost offered from July 2024.
| Base Rate | Gross Rate | AER | Boosted AER (0.11%) |
| 4.50% | 4.24% | 4.32% | 4.43% |
| 4.75% | 4.75% | 4.58% | 4.69% |
| 5.00% | 5.00% | 4.84% | 4.95% |
| 5.25% | 5.25% | 5.10% | 5.21% |
*an additional 0.11% on your Cash ISA AER for up to 365 days from our new customer promotion between 26 and 31 July 2024 (terms apply)
+0.17% promotional rate boost offered between 10-15 September 2024.
| Base Rate | Gross Rate | AER | Boosted AER (0.17%) |
| 4.50% | 4.50% | 4.32% | 4.49% |
| 4.75% | 4.75% | 4.58% | 4.75% |
| 5.00% | 5.00% | 4.84% | 5.01% |
| 5.25% | 5.25% | 5.10% | 5.27% |
*an additional 0.17% on your Cash ISA AER for up to 365 days from our new customer promotion between 10 and 15 September 2024 (terms apply)
+0.28% promotional rate boost offered between 16-22 September 2024.
| Base Rate | Gross Rate | AER | Boosted AER (0.28%) |
| 4.50% | 4.50% | 4.32% | 4.60% |
| 4.75% | 4.75% | 4.58% | 4.86% |
| 5.00% | 5.00% | 4.84% | 5.12% |
| 5.25% | 5.25% | 5.10% | 5.38% |
*an additional 0.28% on your Cash ISA AER for up to 365 days from our new customer promotion between 16 and 22 September 2024 (terms apply)
+0.27% promotional rate boost offered from January 2025.
| Base Rate | Gross Rate | AER | Boosted AER (0.28%) |
| 4.50% | 4.50% | 4.32% | 4.59% |
| 4.75% | 4.75% | 4.58% | 4.85% |
| 5.00% | 5.00% | 4.84% | 5.11% |
| 5.25% | 5.25% | 5.10% | 5.37% |
*an additional 0.27% on your Chip Cash ISA AER for up to 180 calendar days from the day you open the account (terms apply)
Chip Instant Access variable tracker rates
The gross rate tracks the Bank of England base rate minus 1.06%. The current base rate is boe-base-rate, this means; The gross rate on the Chip Instant Access Account is cia-gross-rate. This gives you a cia-headline-rate AER (standard rate).
See below tracker rates for recent Chip Instant Access Promotions:
Underlying AER of the Chip Instant Access Account
| Base Rate | Gross Rate | AER |
| 4.50% | 3.44% | 3.50% |
| 4.75% | 3.69% | 3.75% |
| 5.00% | 3.94% | 4.01% |
| 5.25% | 4.19% | 4.27% |
+0.26% Refer a friend promotional rate boost.
| Base Rate | Gross Rate | AER | Boosted AER (0.26%) |
| 4.50% | 3.44% | 3.50% | 3.76% |
| 4.75% | 3.69% | 3.75% | 4.01% |
| 5.00% | 3.94% | 4.01% | 4.27% |
| 5.25% | 4.19% | 4.27% | 4.53% |
*an additional 0.26% on your Chip Instant Access Account for 90 days from our referral offer (terms apply)
+0.95% promotional rate boost offered from 15 January 2025.
| Base Rate | Gross Rate | AER | Boosted AER (0.95%) |
| 4.50% | 3.44% | 3.50% | 4.45% |
| 4.75% | 3.69% | 3.75% | 4.70% |
| 5.00% | 3.94% | 4.01% | 4.96% |
| 5.25% | 4.19% | 4.27% | 5.22% |
*an additional 0.95% on your Chip Instant Access AER for up to 180 calendar days from our new customer promotion available from 15 January 2025 (terms apply)
Chip Easy Access Account variable tracker rates
The gross rate tracks the Bank of England base rate minus 1.06%. The current base rate is boe-base-rate, this means; The gross rate on the Chip Easy Access Saver is eas-gross-rate. This gives you a eas-underlying-rate AER underlying rate
See below tracker rates for recent Chip Easy Access Promotions:
Underlying AER of the Chip Easy Access Account
| Base Rate | Gross Rate | AER | Reduced Rate (3+ withdrawals) |
| 4.50% | 3.50% | 3.56% | 2.46% |
| 4.75% | 3.75% | 3.82% | 2.72% |
| 5.00% | 4.00% | 4.07% | 2.97% |
| 5.25% | 4.25% | 4.33% | 3.23% |
12 month 0.77% boost, promotion available from 6-19 September 2024
| Base Rate | Gross Rate | Boosted AER (+0.77%) | Boosted Reduced Rate |
| 4.50% | 3.50% | 4.33% | 3.23% |
| 4.75% | 3.75% | 4.59% | 3.49% |
| 5.00% | 4.00% | 4.84% | 3.74% |
| 5.25% | 4.25% | 5.10% | 4.00% |
*an additional 0.77% on your Easy Access Saver AER for up to 365 days from our new customer promotion between 6-19 September 2024 (terms apply)
12 month 0.93% boost, promotion available from 20 September to 14 November 2024
| Base Rate | Gross Rate | Boosted AER (+0.93%) | Boosted Reduced Rate |
| 4.50% | 3.50% | 4.49% | 3.39% |
| 4.75% | 3.75% | 4.75% | 3.65% |
| 5.00% | 4.00% | 5.00% | 3.90% |
| 5.25% | 4.25% | 5.26% | 4.16% |
*an additional 0.93% on your Easy Access Saver AER for up to 365 days from our new customer promotion between 20 September and 14 November 2024 (terms apply)
12 month 0.68% boost, promotion available from 15 November to 12 December 2024
| Base Rate | Gross Rate | Boosted AER (+0.68%) | Boosted Reduced Rate |
| 4.50% | 3.50% | 4.24% | 3.14% |
| 4.75% | 3.75% | 4.50% | 3.40% |
| 5.00% | 4.00% | 4.75% | 3.65% |
| 5.25% | 4.25% | 5.01% | 3.91% |
*an additional 0.68% on your Easy Access Saver AER for up to 365 days from our new customer promotion between 14 November and 12 December 2024 (terms apply)
12 month 0.43% boost, promotion available from 12 December to 18 December 2024
| Base Rate | Gross Rate | Boosted AER (+0.43%) | Boosted Reduced Rate |
| 4.50% | 3.50% | 3.99% | 2.89% |
| 4.75% | 3.75% | 4.25% | 3.15% |
| 5.00% | 4.00% | 4.50% | 3.40% |
| 5.25% | 4.25% | 4.76% | 3.66% |
*an additional 0.43% on your Easy Access Saver AER for up to 365 days from our new customer promotion between 12 December and 18 December 2024 (terms apply)
12 month 0.90% boost, promotion available from 19 December 2024 to 5 January 2025
| Base Rate | Gross Rate | Boosted AER (+0.90%) | Boosted Reduced Rate |
| 4.50% | 3.50% | 4.46% | 3.36% |
| 4.75% | 3.75% | 4.72% | 3.62% |
| 5.00% | 4.00% | 4.97% | 3.87% |
| 5.25% | 4.25% | 5.23% | 4.13% |
*an additional 0.90% on your Easy Access Saver AER for up to 365 days from our new customer promotion between 19 December 2024 and 5 January 2025 (terms apply)
1.03% boost available for 12 months, promotion available from 6-17 January 2025, as well as for 6 months from 17 January
| Base Rate | Gross Rate | Boosted AER (+1.03%) | Reduced Rate |
| 4.50% | 3.50% | 4.59% | 3.49% |
| 4.75% | 3.75% | 4.85% | 3.75% |
| 5.00% | 4.00% | 5.10% | 4.00% |
| 5.25% | 4.25% | 5.36% | 4.26% |
*an additional 1.03% on your Easy Access Saver AER for up to 365 calendar days from our new customer promotion available from 6 - 3pm 17 January 2025 (terms apply).
**an additional 1.03% on your Easy Access Saver AER for up to 180 calendar days from our new customer promotion available from 3pm 17 January 2025 (terms apply).