Budgeting app HyperJar pays you a small boost if you agree to pay for your groceries in advance. Here's how it works and what to watch out for
A big part of managing your money properly is understanding precisely how much you have to spend on various outgoings.
For example, if you set budgets for things like your weekly shop, then you can ensure you don’t overspend and can build up your savings pot.
That can be easier said than done of course, which is why a host of apps have launched over the last couple of years aimed at making it easier for you to get the most out of your money.
One new app worth a look is HyperJar, which helps you split your cash into multiple jars, each of which you can use as a mini account.
It’s not just about devoting money to a jar for saving up for Christmas or next year’s holiday either ‒ you can set up jars for specific retailers that offer additional rewards too.
You get a payment card too, so that as and when you spend, the money comes out of the right jar.
HyperJar has partnered with a bunch of retailers.
Open a jar towards spending with them, and you may be sent offers for their products and services, but more importantly, the money you devote to a retailer jar will also receive an ‘annual growth rate’ (AGR) of 4.8% for 12 months, which is paid on a daily basis.
As a concept, it’s not too different to the interest you earn on a savings account (with a far more generous rate than today's miserly savings), except that you can’t take that money out in cash ‒ you can only spend it with that specific retailer.
Let’s take an example.
I know that I want to spend £300 over the next month at Lidl ‒ it’s Christmas, after all. So I put £300 into my Lidl HyperJar.
With the AGR paid daily, that means that by the end of day one my balance will have grown by 4p.
And it will continue to grow at that rate every day that my balance stays at that level.
HyperJar’s partner retailers include the likes of Shell, Bella Italia, NotOnTheHighStreet and FeelUnique.
Where does my money go?
It’s worth noting that HyperJar isn’t offering a bank account itself. So where does your money go when you put it into the various jars?
The firm explains that your money is kept in “segregated accounts with major UK high street banks”.
This is important, as it means that if HyperJar hits the wall your money isn’t tied into that collapse ‒ it’s still protected, albeit by e-money regulations, rather than the Financial Services Compensation Scheme.
On the security front, HyperJar also makes a point of emphasising that your data is properly encrypted and protected, while you can add fingerprint and facial identification to make your account even more secure.
A smart way to manage your money
I like the idea of the AGR, as it offers a lovely added benefit if you take a long-term approach to how you handle your money.
If you know you are going to spend a certain amount with a retailer, why not put that knowledge to good use and boost your balance by enjoying that AGR?
Of course, that is entirely reliant on you having that cash at your disposal to allocate to the jar.
That’s not going to work for people who have more irregular incomes, for example.
Similarly, it may not be an attractive idea if you’re someone like me that prefers to put all of their spending on a single rewards credit card, and then pay off the balance at the end of the month.
It's also worth pointing out that Lidl now accepts Amex cards, which offer the most generous cashback credit cards, meaning you can get up to 5% back with one of its top credit cards.
A good idea – for some
Personally, I’d rather rack up cashback on all of my spending over the month, which I can then use as I see fit, wherever I want, rather than commit funds to shopping with Lidl, and then only be able to cash in the rewards with that retailer.
But if you have the money in your account, know where you want to spend it, and want to get rewarded for being a bit proactive, then I can see the appeal.
What do you think? Does the 5% AGR boost appeal to you, or is it just a gimmick? Let us know your thoughts in the comments section below.
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