Should you move to app-based bank Monzo?
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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.
Monzo Plus
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.
My verdict
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 management 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
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Innovative budgeting features
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Card management features
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Overseas spending
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Savings rates
Summary
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.
It’s been brilliant for me so far. I joined Monzo after doing some research to find the best way of spending money abroad. My old bank would charge me extra fees for using my card, using ATMs and then even give me their own exchange rate which was far poorer than the actual one from Visa/Mastercard. Monzo is a far better alternative as they don’t charge these fees and give you the actual exchange rate i.e. the one you find on Google.
It was also a nice bonus to get a free £5 put into my account for signing up first using a friend’s referral link. If you’re thinking of joining, feel free to use mine and you’ll get it too.
join.monzo.com/r/h3c14a2
Main pros for me with Monzo are:
Savings pots with interest over £1000,
Pots which you can move money out of your main/ current account and set money aside, with savings goals too,
real time spending which comes through as a notification as soon as the payment is processed,
Set budgets where you can monitor commited spending (bills) and other budgets which fall into 12 other categories.
Set your payday and it estimates out how much money you should have left based on scheduled payments and budgets set
You earn £5 upon signing up if using the following code: https://join.monzo.com/r/td6rrhn
I really recommend Monzo.
I think it’s the best current account and use it for all my banking now.
If you are thinking of joining , please use my referral Link.
https://monzo.com/referral?code=ukow78k
Using this link we both will get £5.
Thank you in advance for using my link
I’ve been using monzo for about a year and a half now and I can honestly say, I’ve loved using it.
Initially, I liked the fact that you it could help you budget, as that is something I have struggled with in the past.
The app itself is easy to use and navigate around and allows you to easily see where and what your spending your money on.
Their customer service is also very good.
Over the last few months I’ve also been using their current account. Essentially it’s the same, but you can get your salary paid into it and set up direct debits.
I intended on using these features but unfortunately I was made redundant at the beginning of the month so I have nothing to get paid into my account.
Overall tho, over the last 18 months I’ve seen a decline in how much I use my Barclays account (including my Bpay contactless wristband)
Hi
It took me 2 weeks to receive the card. They have full control over your money. They do whatever they want with the money you have on your account. They have closed and cancelled my account without any reason or even letting me know in advance. Their customer service is poor! I had money transfered to the account and they had transfered all the money back; that left me in massive trouble. And all these without warning or any information!
Would not recomment monzo to anyone!!!!!!!
They ask for all you bank details before telling you that you need photo ID. It is hit and miss where you can use it and it will be accepted. It was quicker opening a Nationwide current account on line (10 mins) I am told they will be phasing these accounts by next year anyway!
Hi how long does it take for the Monzo card to arrive in the post once you have topped the waiting que on the App.
I got my card in about three working days I think, though I can’t guarantee it!
We have been using mono for over a year now and absolutely love it! We have used it abroad several times and never had any issues and always got the best rates!
I love the Monzo card. Global citizen here and I find myself ordering things online in different currencies wherever I go as well as purchasing services/essentials/gifts for my global family quite often. Monzo has saved me an enormous amount of money! I can’t believe it. I used to loose so much in transaction fees or physical currency exchange or have to keep up with all my bank accounts all over the world. Now I don’t bat an eyelid. Just used Monzo in UK, Bali, Marrakech, Bangladesh, Singapore and the USA and it was great! Can’t wait for the current account and a real card (not pre-paid) as I could not add Monzo to my paypal or hotels don’t accept it as a ‘deposit’ credit card when checking in. Cards like Monzo are the future. High street banks better pay attention… all those transaction fees are not going to help you one bit with the youth that now live and work all over the world. I think its only available in the UK since family and friends in the US could not sign up for it using a US address. I’ve recommended it to others who have signed up and are raving about how much we are now saving 🙂 Monzo is definitely for the global citizen!
Yeah my colleague at work is often in France and Belgium visiting family so it makes his life so much easier! Interesting to hear about the hotels not accepting it. I had written a section about this (and car hire) but it seemed to work for some people so I removed it before publishing.
Please check your facts before posting.
qt: But when Monzo moves to a full current account this feature won’t exist!
(under ‘It can help you stick to budget’
Top ups will remain in place after current account launch. Here’s the source: https://community.monzo.com/t/top-up-amount-box/7660/11
qt: If you can’t use your phone, you can transfer from your other bank’s online service. The info you need is all stored on the app, you don’t get your own sort code or account number, though you can find it on the Monzo website. It’s worth storing these somewhere for easu access.
9 digit code and account details are NOT in the Android app.
Account details are in iOS app.
9 digit code is on the card. Account info can be found in few places. You can ‘access’ this information probably under 60s, how is that a downside in a ‘app only’ aspect?
This paragraph is very confusing for Android users and makes no sense. 🙂
And you weirdly presented the top-up aspect. Once Monzo has current accounts, you can send salary there, so you won’t need to top-up.
You can also set up automated bank transfers with pocket money, while the app provides good overview of the spending.
If you don’t want to put salary on Monzo, then yeah, you’ll need to send money in SOME way, that’s just stating the fact.
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Overall, I feel like few ‘downsides’ in this article were forcibly put there to make an impression of professional and critical review. Too bad they don’t make any sense.
In reality, it just exposes shallowness of this review. Monzo isn’t perfect, there are some problems, or aspects that could be problem for some people. Too bad that the author focused on describing 5 most well-known things about Monzo.
Hi M, this review is for people who don’t have Monzo or even heard of it (which is a lot of people) so its focus is on the basic things. Really interested to hear about the other things you’ve picked up as a longer term user though. What’s not worked for you?
What, M, don’t state you’re quoting his article (assuming that’s what ‘qt’ means) and then write your own paraphrase of his words! That’s far more misleading than even you try to make the author out to be!
In any case, in my opinion the article is written informatively and doesn’t just ‘make an impression’ of being balanced. But that’s just my opinion; you’re entitled to yours of course but don’t accuse someone of being incompetent and then be misleading yourself.
🙂