The digital challenger has upped the rate from 3.05% AER (variable) for balances of between £1 and £250,000.

It comes just over a week after the fintech firm confirmed it would pay savers’ interest, rather than a bonus, meaning they would be protected under the Financial Services Compensation Scheme (FSCS) up to £85,000.

The latest rise means it knocks Paragon’s Triple Access Savings Account (Issue 11) off the top spot. This account pays 3.10% and has been at the top of the best buy table for over a week.

What you need to know about Chip

Chip is a digital challenger founded in 2017 and to date, half a million app users save and invest with the fintech firm.

Its aim is to follow the Bank of England’s base rate, taking the hard work out of savers actively moving their cash around to chase the best rate. It also wants to reward customers faster than the banks by passing on rate rises in a more timely manner than the traditional lenders.

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Money deposited into the fee-free Chip Instant Access Account is held by the UK authorised bank, ClearBank.

As Chip has moved away from offering savers a bonus return, and instead pays interest, customers benefit from monthly compound interest – earning interest on their interest – something which wasn’t possible under the previous model.

Savers can also withdraw the interest at any time, and can set up autosaves as well as ‘goals’ for savings.

New savers can download the Chip app from the App Store or Google Play Store, or by scanning the QR from the Chip website.