Monzo bank review

Should you move to app-based bank Monzo?

There’s quite a cult around Monzo, with tech-savvy customers raving about the featured packed app and coral coloured card. But it’s no longer just the early-adopters with accounts.

More than five million people now use Monzo, and it tends to gain more new customers each quarter than the bulk of the established banks.

It’s full of innovative features which mean it’s a very different banking experience to what you’re probably used to.

Here’s my take on Monzo.

What is Monzo?

Monzo is one of a growing number of digital banks that don’t have branches or even call centres. Instead it is operated entirely 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.

As I reported last year, the bank is struggling to make ends meet, and its recently added new charges and restrictions for account holders and introduced fee-paying versions of the account.

But it’s a fully licensed bank, meaning your money is protected under the Financial Services Compensation Scheme if it was to go under.

Types of Monzo account

There are three different personal accounts from Monzo. The standard free version, which this review will focus on, and two paid for accounts: Monzo Plus and Monzo Premium.

You can also get a joint account, a 16-17 account and a business account.

My reviews of Monzo Plus and Premium

Monzo’s features

As I said this review is about the free version of Monzo, but all the features listed here are also available on the paid options.

The key selling point is the app, which is packed full of innovative features to help you manage your money. Of course with anything new the other banks are trying to emulate them, but Monzo still has more than most others.

Here’s my take on some of Monzo’s key features:

Spending with Monzo

Mastercard debit card

Monzo’s debit card is one of the most identifiable – coming in a “hot coral pink” colour. It’s a Mastercard so you won’t have any issues using it. You can add the card to Apple Pay and Google Pay.

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.

‘Committed spending’

This feature is essentially a list of all the regular outgoings you pay each month, from bills to subscriptions to transfers.

Adding receipts and notes

You can take a snap of your receipt and attach it to the transaction or add notes about the purchase.

Spending abroad

You can spend on your card overseas and not get charged any fees. This was the main motivation for me to get the card back in 2017 when all spending and withdrawals were fee-free.

Since 2018 there’s been a limit for taking out cash, meaning there’s a 3% charge on anything over £200 in a 30-day period (£250 in EEA).

This limit means my top-pick for overseas spending is Starling Bank. 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.

Cash withdrawals

There’s a £250 limit every 30-days on cash withdrawals in the UK, unless you meet certain condtions. More on this below.

Split the bill

If you want to split the cost of a purchase with other Monzo customers you can easily and quickly do this within the app. However, it’s no use if they’re with another bank.

Budgeting with Monzo

One of the early selling points for Monzo were the budgeting features. And this still stands today – in fact I think it’s one of the best reasons to consider an account. You’ll get a much greater understanding of where your money goes, and some tools can help prevent you overspending too.

Monzo Pots

A classic budgeting method is the “jam jar” or envelope system where you physically divide your money for different expenses, eg bills or food. Well, you can do that digitally with Monzo via a feature called Pots.

These are separate parts of the your account where you can move money, essentially partitioning your overall balance into smaller amounts.

You can have 20 different Pots and they can each have the name and photo customised to show their purpose.

This could be specific spending needs, such as a Pot for your rent and nights out, or to act as savings goals. To use the money in most Pots you need to transfer the money back to your main account.

The exception is the Pot you choose for bills. Here you can add in any direct debits and standing orders and the money will be moved from the bills Pot to cover the payment.

I love this feature as it really helps you separate your essential spending from your ‘discretionary spending.

Salary sorter

You can make it easier to split money paid into the account across different Pots using the salary sorter. Sadly it’s not automated, but it does remember the previous proportions so if you want to do the same each month it’s an easy click.

It doesn’t even have to be your salary, any deposit can be split this way, but these payments in must be over £100.

Tracking your spending

The app also tags all your spending with categories such as ‘Groceries’ and ‘Transport’. These allow you to see at a glance where the money is going. You can’t customise the categories with the free Monzo account.

Setting budgets

This feature is quite hight level, but better than options in most other banks. It’s essentially a spending budget where you set limits for each category. Say you set the ‘Eating Out’ category to £100 a month, each transaction tagged to this category will reduce the total. The idea is you’ll get an indicator that you’re about to go over your set budget for that month.

Left to Spend

You’ll see this on the home screen of the app. This overall figure tells you how much unallocated money you have left until the end of the month (or a different set day each month if you want it to tie into payday).

If you don’t have the budget feature set it’ll be the total balance in your main account (not including your Pots) minus any committed spending.

If you do have budgets, it’ll use the total you’ve allocated minus what you’ve spent into those categories and the committed spending.

Saving with Monzo

Savings Pots

There are two types of Pots to help you save. The official savings pots pay interest, but the rates can easily be beaten elsewhere. So it’s best to ignore these.

But you can also use standard Pots as places to separate money for all your savings goals from your main spending account. You can move money to these pots manually and set up scheduled payments (essentially standing orders).

Automated savings and challenges

You can also automate moving money into Pots based on certain challenges and conditions. I really like this feature.

The easiest one to access is the Round-Up Transactions option. You can select this on a designated pot. Every time you make a purchase Monzo will 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 also use Monzo to automate the 1p savings challenge, where 1p is moved everyday or variations of this. Or taking it further you can create rules (via free service called IFTTT – If This Then That) such as move money every time it rains or when you go to a certain location.

More on these in my video below.

Other features

Easy account sharing

This is such a useful feature. You can send your account number and sort code quickly via messenger, email and other apps on your phone with a few clicks, or you can select and copy the details.

PIN and card tools

Monzo was one of the first banks to let you check your PIN on the app – though many more are doing this now. You can’t change it in the app though – you still need to do that at an ATM.

Another feature that other banks have copied is the ability to freeze your card if you think it’s been lost.

You can also see your debit card number via the app. 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. 

Gambling block

Though this can be turned on and off, it’s a good extra to have if you are someone who struggles with gambling.

Early payday

You can choose to receive your salary at 4pm the day before it’s due to hit your account. Monzo essentially advances the payment as it can see the transaction pending – but only if your employer uses Bacs to pay you.

Overdrafts

Though not great, Monzo overdrafts can be cheaper than most other banks now they all charge around 40% interest. Depending on your credit rating you’ll get charged 19%, 29% or 39%.

Monzo fees and restrictions

Since 31 October 2020 there have been some new charges for free Monzo customers.

Cash withdrawal fees

First up there’s a 3% charge on cash withdrawals above £250 every 30 days in the UK and European Economic Area. Previously there had been a £200 free limit for overseas cash withdrawals, and that will remain for countries outside of Europe.

This might sound quite harsh, but actually I don’t think it’ll have much impact (On its blog, Monzo says 79% of customers wouldn’t have paid the fees based on the last year).

The main reason is most Monzo customers don’t use cash, so a £250 limit will be more than enough.

Plus people who are using Monzo as their main bank account aren’t hit by the fee. This is defined as paying in at least £500 each 35 days and having one active direct debit. This exemption also applies to anyone receiving DWP payments each month or a student loan payment every eight months.

And if you don’t use your Monzo account as your main account, then you can just use your other account to take out cash.

Card replacement fees

There’s a £5 charge for replacement debit cards, unless your card has been stolen, expired or compromised by fraud. Again those defined as using Monzo as their main account are exempt and can get two free replacements a year.

Cash deposit restrictions

As well as the charges for taking cash out, you also have to pay to deposit cash. It’s £1 each time using a PayPoint location. There are also limits on how much you can pay in. Each deposit is capped at £300 (so you’ll pay the charge on each deposit), plus there’s a limit of £1,000 every 180 days.

I’d say even if you rarely use cash it’s another good reason to have more than one current account.

My verdict

It’s a really good bank account, though I’ll never understand the almost cultish fandom I’ve seen from people I know with a Monzo card.

The budgeting features are fantastic, and I do think they can help you keep track of your spending. I really like the card management features too – such as revealing the PIN and debit card number.

My favourite extra is the ability to customise all the ways you can boost your savings – though they’re more fun than essential. I still recommend using standing orders to move money to separate savings accounts with decent interest rates.

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.

All in all, I’d really recommend it to anyone who needs help with their budgeting. However I wouldn’t make the move to use it as your only account.

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.

And of course other banks provide you with things like cashback on bills or high-interest rates – all worth taking advantage of.

The aforementioned financial worries shouldn’t be an issue right now but they are worth keeping at the back of your mind.

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.

I’d give 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.

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Watch new videos every week on the Andy Clever Cash channel, plus a regular live Q&A

15 thoughts on “Monzo bank review

  1. I’d think carefully before joining Monzo. It’s become muddled with the different options available and the community website it prides itself on has become toxic. I was a customer for three and a half years before I decamped to Starling, as it became apparent that I wasn’t really its core customer (I’m 40), except I made the mistake of investing in them and have lost nearly £100 (thankfully not more). Starling might not be as flashy but has so far provided a much better customer experience overall so far.

  2. 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.

  3. 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

  4. I really recommend Monzo.

    I think it’s the best current account and use it for all my banking now.

  5. 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)

  6. 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!!!!!!!

    1. Monzo has lost all my trust I’ve been waiting for 1 year, my card information has been stolen, I can’t access the application. Someone else is using it. Even though I reported that someone else is using it, the Monzo hotline asked for a photo with ID information, I took a video, I did everything, I couldn’t use my account. It saddens me to use such an irrelevant card to their customers. I have the card with me but I can’t use it, it’s ridiculous

  7. 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!

  8. 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.

    🙂

  9. 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.

    1. I got my card in about three working days I think, though I can’t guarantee it!

  10. 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!

  11. 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!

    1. 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.

  12. 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?

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