How do you feel about an internet only bank? Well, take a look at my Monzo review to see the advantages (and disadvantages) of going all digital. And, you can earn yourself a free £5.
I’m a little ashamed to admit that I only recently opened my Monzo account. I like to think of myself as slightly ahead of the curve when it comes to technology and banking, but I’ve been a little slow here.
What is Monzo?
Monzo is an online bank based in the UK that started out in 2015 and initially offered a prepaid debit card and mobile app. But in 2017 they were granted a banking licence and allowed to provide customers with current accounts. By February 2020, it was reported that they had 3.5 million customers.
Is there a monthly fee for Monzo?
There is no fee attached to the Monzo account. You will only pay money if you borrow money from them.
Is my money safe with Monzo?
Because Monzo is a registered bank, it means that your money is FCSC protected. If anything should happen to Monzo, up to £85,000 of your money is guaranteed by the UK government.
What are the benefits of Monzo?
You might be asking why you need another bank account. After all, most traditional banks now allow you to control everything from your phone anyway. Well, Monzo comes with some handy extras.
- Get paid… a day early
- Salary sorter
- Bill pots
Get paid a day early
Exactly as it sounds, if your salary is paid into your bank account, you can receive it one day early.
This allows you to sort your salary into bills, savings and spending which helps make sure you don’t overspend for the month.
If you prefer, you can place some of your bill money into particular pots. That means when a certain bill is due, you’ll have enough money to cover it.
You can place your money into a fixed savings account. If you deposit a minimum of £500 for 1 year, you’ll earn 0.6% in interest. There is also an easy access option too, so you can get access to your money straight away.
Monzo comes with a handy budgeting section. Here, you can see a summary of how much money is coming into your account and where it is being spent.
You can also set yourself a monthly budget. This can be an overall amount for the whole month or you can break it down into smaller chunks. For example, you could set yourself a limit of £40 for eating out and £50 for entertainment. Monzo will let you know when you near your limit.
Another benefit is that you can receive notifications to your phone every time a transaction is made. This is great for keeping an eye out for fraud.
And if something you should lose your card, you can freeze it with a flick of a button.
You can withdraw up to £200 fee free over a 30 day period when you’re away from the UK. And unlike some banks, Monzo won’t charge you an exchange rate fee either.
If you choose to, you can apply for an overdraft of up to £500 with Monzo. Interest rates range between 19% – 39% AER depending on your circumstances.
You can also borrow up to £3,000 through a loan. But at 26.6% APR, I would strongly suggest looking elsewhere.
A disadvantage to savings pots is that money can’t be spent from there. So if your current account is running low and you don’t have an overdraft, your direct debits and standing orders could be bounced. So although saving pots are meant to help, you may actually need to keep a closer eye on your Monzo account.
The £200 fee-free limit when you’re abroad isn’t the most generous either. Useful for short breaks, I don’t think it will help much for more than a few days. Anything over £200 and you will be charged a 3% fee. Personally, I prefer something like the Halifax card as a better option or you could combine it with Revolut.
My Monzo review conclusion
I like Monzo, I really do. However, there’s not enough there for me to switch away from my main current account. Santander pays me for having direct debits with them and there are other accounts that pay more interest.
But… I’m going to keep my Monzo account open.
If my Monzo review has interested you, use this link to find out more and if you join, we both earn £5 when you make your first payment.