Should you move to app-based bank Monzo?
There’s a bit of a cult around Monzo, with tech-savvy customers raving about the featured packed app and coral coloured card. And it’s gradually spreading outside this group into the mainstream. The latest bank switching stats show the bank is gaining new customers faster than most others – only HSBC, Natwest and Halifax grew by more in the first quarter of 2019.
With the bank introducing a new premium option, I thought it was time to revisit my review from a few years ago to reflect the changes and help you decide whether you should make the move.
What is Monzo?
Monzo is one of a growing number of “smart” banks that don’t have branches or even call centres. Instead it is operated all through an app. The idea is that everything has been developed from scratch to work in a digital age, unlike the other banks who’ve had to adapt and migrate existing systems – which doesn’t always work (hello TSB).
It started life as a prepaid card, but moved over to a full current account in 2018. It now works just like any other account. You get a Mastercard debit card, and you can download bank statements if needed.
How much does Monzo cost?
The standard Monzo account is free. In fact you can get £5 for signing up and then using your debit card once.
The new Monzo Plus features start from £3 a month, but could be as high as £13 if you add-on all the options.
How Monzo works
A lot of the features in the app have been quite innovative in trying to help you manage your money. Of course with anything new the other banks are trying to emulate them.
Here’s my take on some of Monzo’s key features:
You can track your spending
One of the early selling points for Monzo still stands today. The app puts all your spending into categories so you can see at a glance where the money is going. You can set limits for each category, say eating out, so you know when you’re close to busting your budget.
There’s also the option to set your payday and detail “committed spending”, essentially those direct debits and standing orders which you know are going to come. This gives you an estimate of how much money you really have to spend until you next get paid.
You get instant updates
As soon as you use the card you’ll get a notification on your phone as to the amount. You’ll see it in the app too – unlike some banks where it can take a while to come through. This is particularly handy abroad as you’ll see exactly what you’ve spent.
You can automatically round up spending and move it to savings
I really like this feature. Every time you make a purchase you can choose to let Monzo round up the amount. So say you spend £13.42. That will get rounded up to £14, with 58p moving across to one of your savings pots. It’s a nice way to make sure you don’t forget to put some extra cash aside. And even though it’s a small amount, it can quickly add up.
You can use Monzo abroad fee-free (almost)
This was the main motivation for me to get the card back in 2017 when all spending and withdrawals were fee-free. Last year a limit was added to taking out cash, meaning there’s a 3% charge on anything over £200 in a 30-day period.
This limit means it’s no longer my top-pick for overseas spending, with Starling Bank or the Tandem Credit Card better options. However, if you don’t think you’re ever likely to take out more than £200 in cash or if this isn’t your primary concern when choosing a bank, then Monzo is still a decent option.
You can freeze your card if you lose it
If you lose your bank card with a traditional account you need to call up and get it canceled. With Monzo you can freeze it from the app, giving you time to check it’s not down the back of your sofa or next to your laptop at home.
You can check your PIN
A few years ago on a trip to Copenhagen I completely blanked when trying to enter my Monzo PIN. I’ve no idea what happened, it just disappeared from my brain – I’m sure you’ve had the same happen at some point. The danger is if you enter the wrong one three times your card will be locked.
So I like this feature where you can check your PIN through the app. You can’t change it in the app though – you still need to do that at an ATM.
You can see your debit card number
It’s hidden but can be revealed with your PIN. This is handy if you don’t have your card on you but need to make an online transaction.
You can take a photo of receipts
This isn’t something I’m likely to use, but you can go into each transaction and take a snap of the receipt, or add notes about the purchase.
You can block gambling transactions
Though this can be turned on and off, it’s a good extra to have if you are someone who struggles with gambling.
This has just been announced and there’s a waiting list for customers to be the first to get the added features. But at a cost.
The basic extra will cost £6 a month, though it’s reduced to £3 a month for the first year for early upgraders. For this you get:
- A new debit card in either Monzo’s traditional Hot Coral, or in one of two other colours
- Access to Monzo events and swag
- A personalised Monzo link
This is awful!!! £72 is a lot to spend just to get a different coloured bank card. Of course the events could be amazing, but I’ doubt it.
On top of this Monzo Plus members can add on extras
- Travel insurance at £4 a month
- An increased overseas cash withdrawal limit of £400 a month for £3 extra a month
This could all change when Monzo Plus is launched – particularly as it hasn’t gone down well with some of the Monzo aficionados. But for now, stay well clear.
It’s good, but I don’t quite understand the almost cultish fandom I’ve seen from people I know with a Monzo card.
The budgeting features are really interesting, and I do think they can help you keep track of your spending. But you can use third-party apps like Yolt to do the same thing, and it’s something the other high street banks are adding to their own apps. I really like the card managemnet features too – such as revealing the PIN and debit card number. But they aren’t essential.
And though the overseas spending feature is great, the limit on cash withdrawals means there are better options. In fact, if you’re thinking of changing bank then I’d say you’re better off taking advantage of the offers available from other banks. You can get up to 5% interest on savings, cashback on your bills or cash bonuses for switching.
Plus since the primary way to manage Monzo is via the app, if your phone battery dies, you lose your phone or there’s a technical issue with the app then you’re pretty much stuck! There is a telephone help desk, but there are no bank branches to visit or websites to log in to. I wouldn’t rely on Monzo as my only bank.
However, if you’re happy to have more than one account then you could get the best of both worlds as use a standard Monzo account for your everyday spending, with your savings or bill payments sitting with a different bank.
And you can get a free fiver for joining up – so it might be worth giving it a go. You can always use it as a switching account if you don’t like it!
How to get a Monzo card
You simply download the app and apply. But to get the free fiver you’ll need to go via this link to sign up.
Monzo Bank current account
Monzo has lots of great features, but I wouldn’t use it instead of an account which offers things like decent savings rates or cashback on bills. However it could be a great second account.