Monzo is one of the most popular digital banks in the UK. It started life in 2016 as a prepaid card and has grown to become a fully-fledged bank, offering current accounts, savings accounts, loans and overdrafts.
With no branches and just a mobile app to manage your account, what exactly is so special about Monzo that made it one of the biggest names in digital banking? Let’s take an in-depth look into Monzo, its range of products and features, and the mobile app that everyone is talking about.
What is Monzo?
Monzo is a UK digital bank founded by former Starling bank employees Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Ripdon, and Gary Dolman. It began life as Mondo, a prepaid debit card which customers could add money to using an app on their phone.
Monzo has grown quickly in a short time. It has gone through a rebrand, received a banking licence, launched a range of current accounts, loans, and savings products, and expanded into the United States, all while achieving some of the best customer reviews on the market.
Today, it has moved away from being a prepaid service and now operates the same as a traditional high street bank, except that with Monzo you manage everything with an app on your smartphone, including opening an account.
Monzo makes a point of differing from old-school banking methods and aims to always offer a transparent service and put customers’ needs first. It even has a public ‘Transparency Dashboard’ on its website, so you can see which features and services are being worked on, have an input on what new features you would like, or which existing features you would like Monzo to improve.
History of Monzo
- 2015 - Tom Blomfield and Co launch Mondo.
- 2016 - Mondo sets the record for “quickest crowd-funding campaign in history” after is raises £1.6m in 96 seconds.
- 2016 - Mondo changes its name to Monzo following a copyright dispute with an unknown company.
- 2017 - Monzo’s initial banking licence restrictions are lifted, and it rolls out current accounts.
- 2018 - Monzo reaches its one-millionth customer.
- 2019 - Monzo announces it is to offer its services in the United States.
Is Monzo safe?
The Financial Conduct Authority (FCA) regulates Monzo, so it must follow strict rules and guidelines to protect its customers’ money.
The Financial Services Compensation Scheme (FSCS) protects up to £85,000 of your money, so should Monzo go into administration, your money will be safe.
All services supplied by Monzo, such as its mobile banking app, are secured with passwords and pin numbers. If you make an online payment, Monzo will require you to approve it using its app before it processes the payment.
Monzo issues all of its accounts with a MasterCard debit card, which provides additional peace of mind and security whenever you use your card.
In a short time, Monzo has racked up some great reviews from customers and industry professionals.
Trustpilot rates Monzo 4.5/5, with 84% of customers rating it as great or excellent. However, 15% of customers have rated it as poor or bad.
Monzo has received multiple awards since its inception. In 2019 it won ‘Best Banking App 2019’ at the British Bank Awards and placed 2nd ‘Best British Bank’, with a 98.4% satisfaction rating, just behind Starling Bank.
Fees and charges
There are no fees or charges to bank with Monzo. It is free to use your card in-store and online and withdraw cash from an ATM in the UK. Payments abroad are also free, except for the exchange rate, with no extra fees.
The only time Monzo will charge you a fee is if you have an overdraft, withdraw cash abroad over its monthly limit, or transfer money abroad.
Monzo account and features
Monzo provides all of its accounts with features and benefits that have propelled its popularity in the UK and the hot coral debit cards it issues with all of its accounts have become synonymous with the bank.
Monzo has always made a point of helping its customers improve their spending habits and get a better handle on their finances. It seems to use this as a basis for developing new features and benefits for its customers. Focusing on what helps customers, over what helps it make more money.
Monzo has some great features that come as standard with all of their accounts:
- Get paid before the rest of your colleagues.
- Manage your spending with in-app budgeting tools.
- Get instant notifications on your phone whenever you pay with your Monzo card.
The Monzo app
Monzo does not have any branches. Instead, the Monzo app is the main hub for all of your account activity. It is one of the best apps on the market and won Best Banking App at the 2019 British Bank Awards.
The Monzo app is split into three sections; Home, Payments, and Help. You can use the app to:
- View your account balance, spending summary and budgets.
- View your transaction history and account information.
- Send money to other people or transfer funds between accounts.
- Apply for an overdraft or loan.
- View and amend your direct debits and regular payments
- Speak with an advisor and view FAQs.
You secure your account with a password that is required each time you log into the app. Facial or fingerprint ID is also available on compatible devices.
The app uses location-based security, so if someone attempts to pay using your card, somewhere you are not, then Monzo will decline the payment and send you a notification to let you know. If you have lost your card or someone has stolen it, you can freeze it using the app. You can then request a replacement or unfreeze it if you find it stuck behind your sofa.
Every time money enters or leaves your account, Monzo assigns it a category, such as 'Groceries’ or 'Bills’. You can view a summary of your spending on the Monzo app to see where you are spending most of your money.
An impressive part of Monzo’s budgeting is that you can set monthly limits for each category as well as an overall budget. If you set a budget of £100 a month on ‘Shopping’ then Monzo will alert you when you have nearly reached your limit, so you can cut back on your spending.
You can edit the category Monzo assigns a payment if it gets it wrong. For example, it might think the £50 you spent at Sainsbury's petrol station was ‘Groceries’ instead of ‘Transport’
Your allocated ‘Bills’ budget can be separated from your main account as soon as you get paid and it can take your direct debits and bill payments from this separate budget to prevent you from spending it.
Every time there is activity on your account, you will receive an instant notification letting you know:
- The amount paid or received.
- Where the payment was made or the name of the person who sent you money.
- How much you have spent so far today.
You will also get an instant notification if Monzo declines your payment, letting you know how much it declined and the reason.
Get paid early
Did you know that nearly every bank in the UK could give you your salary a day earlier? Most banks receive your salary from your employer through a system called BACS (Bank Automated Clearing System).
Your bank will know you will get paid, by 4pm the day before because the payment will already be in its system. However, most banks don’t process BACS payments until midnight, which is why you often get paid at two or three in the morning.
Monzo came up with the clever idea of giving its customers the option to receive their salary sooner. It will send you a notification by 4pm the day before each payday as soon as it sees your salary payment on its system. It will give you the option to either receive your salary immediately or wait until the next day. A simple yet useful idea that could come in handy towards the end of the month.
Savings Pots are what Monzo calls its savings accounts. You can add Savings Pots to individual and joint accounts.
You can create as many Savings Pots as you need and you can give each one a unique picture, name, and savings goal.
You have a few options for adding money to your Savings Pot:
- Roundups - Whenever you make a payment, Monzo will round up your purchase to the nearest pound and move the money into your chosen Savings Pot.
- Automated savings - You can arrange for money to transfer automatically to your Savings Pot under certain circumstances, such as putting £5 into your Rainy Day pot whenever the weather gets hotter than 20 degrees - Clever.
- Regular transfers - Move money from your Monzo account to or from your Savings Pot as often you like or set up regular deposits on a chosen date, such as a payday.
Monzo has partnered up with multiple providers so you can select which savings account you want based on the provider and its interest rates.
A selection of easy access and fixed-rate ISAs are also available with various providers to choose from.
Unlike other digital banks, Monzo doesn’t offer tiered accounts, meaning there is no premium account, metal card, or accounts that give you extra rewards in return for a monthly fee. Instead, each customer receives the same service, benefits, and features.
With a Monzo current account, you receive a MasterCard debit card that you can use for free throughout the UK and abroad.
You can use a Monzo current account in the same way you would a traditional bank account, including:
- Receive your salary.
- Pay direct debits and standing orders.
- Send and receive payments.
- Withdraw cash from an ATM.
- Spend in-store or online.
Users would pay a monthly fee for a ‘Bundle’, which was bolted on to their existing current account, with the option to choose from a selection of different coloured Monzo debit cards.
|The Supporter||£6||Exclusive Monzo Plus Merchandise.
Offers and discounts.
|The Home||£12||Contents Insurance (£20,000).
Offers and discounts.
|The Traveller||£9||Worldwide travel insurance.
Increased ATM withdrawals abroad.
Emergency cash abroad.
Offers and discounts.
Airport lounge access.
The initial launch of Monzo Plus fell flat, with a lot of customers claiming the cost was too expensive for what you get compared to other digital banks with premium accounts.
Just 5 months after its launch, Monzo announced it was shutting down Monzo Plus and it would rethink the structure.
Monzo cancelled existing Monzo Plus memberships and customers received a full refund for their time being a Monzo Plus customer.
Those under the age of eighteen can have a Monzo account, thanks to its 16-17 current account. The account gives you the same features and benefits of a standard current account except it restricts or blocks certain spending such as gambling, and overdrafts are unavailable.
A Monzo joint account is a great way to manage shared finances, savings, and bills. You will both need an individual Monzo account before opening a joint account.
Both account holders will receive a debit card and have access to the joint account in their Monzo app to view recent payments, send money, transfer money to your other Monzo accounts, and access shared savings accounts. You will also both receive notifications whenever there is activity on your account.
A joint account operates in the same way as an individual current account, except both account holders have full control over the account and the money held in it, so it is advisable to only open a joint account with someone that you know and trust.
Monzo has yet to add a credit card to its range of products. However, if you open a credit card with a different provider, you can then pay your monthly credit card statement with your Monzo account via direct debit.
With Monzo, you can set up an arranged overdraft of up to £1,000 for up to 31 days.
If you are eligible, you can set up your overdraft from the Monzo app and decide what size overdraft you require and how long you wish to have it available.
Monzo charges 50p per day when you are in your arranged overdraft by £20 or more, up to a maximum of £15.50 a month. As a representative example, if you had an arranged overdraft of £1,000 for 31 days, it will charge you £15.50.
Every Monzo account has a £20 buffer, even without an arranged overdraft. Meaning that Monzo won’t charge you for going overdrawn by £20 or less.
Monzo is one of the first digital banks to offer loans to its customers. True to its values of transparency, customers can apply for a loan within the Monzo app and have full visibility of the rates and repayments.
Monzo loan benefits include:
- Apply in 5 minutes by answering three short questions.
- Borrow up to £15,000.
- Receive the money in your Monzo account the same day.
- No fees to change your repayment date, repay early, or make extra repayments.
Monzo is rolling out its business bank accounts in waves, and you can register your interest on the Monzo website and it will let you know when more business accounts are available.
A Monzo business account comes with many of the same features and benefits as an individual current account, plus:
- Third-party app integrations, such as Xero and FreeAgent to manage your business expenses.
- Employee access - Grant your colleagues access to your Monzo business account.
- 24/7 customer support.
- Business Pots - Put your tax money in one Pot and your overheads in another.
Compare the best bank accountsStill unsure if Monzo is the right bank for you? Then why not compare the best bank accounts to see what other options are available.
How to open an account with Monzo
It is fast and straightforward to open a new Monzo account and the process should only take ten minutes. Firstly, you will need to head over to the App Store or Google Play Store on your phone and download the Monzo app for free.
Monzo will ask you for some personal information to open your account, such as
- Date of birth
- Mobile number
- Home address
Who can open an account?
Monzo is available to all UK residents provided that you:
- Are 18 years old or over.
- Are a UK resident.
- Have a compatible smartphone.
- Hold a valid proof of ID.
- Don’t already have another Monzo account.
If you are under eighteen, then you can apply for the Monzo 16-17 account.
What is the application process?
Once you have downloaded the Monzo app and entered the required information, it will ask you to provide proof of ID. You do not need to pass a credit check to open a Monzo account, but you will need to if you wish to apply for an overdraft or loan.
You will need one of the following forms of ID:
- Driving licence
- Provisional driving licence
- National ID card
- Other Government-issued photo ID
The app will prompt you to take a photo of your ID and then require you to record a short video of yourself saying “Hello, my name is [your name]. And I would like a Monzo account”, Monzo compares this video with your proof of ID to confirm you are who you say you are, and that you want to open an account with them.
Unlike other banks, you do not need to provide proof of address for a Monzo account, as they verify your date of birth instead.
Once you have provided your ID, Monzo will ask you for a UK address so it can send you your new debit card, which normally arrives in a few working days. This doesn’t have to be your home address if you prefer it posted to your place of work or a friend's house.
You can add your new Monzo card to Apple Pay or Google Pay while you wait for your card to arrive so you can use it straight away.
Once you are up and running with your new Monzo account, it is very easy to use. Although it does not have any branches, you can still do everything you can do with a traditional account, including paying in cash and cheques to your account.
Direct debits and standing orders
You can use your Monzo account to pay bills via direct debit and standing order.
To set up a new Direct Debit, provide your supplier with your Monzo bank account and sort code and they will take care of the rest. The Direct Debit guarantee applies to any direct debits you have set up with Monzo.
To set up a standing order or regular payment, you need to head to the payments section of the Monzo app and input the account information of the person or organisation you want to pay, including:
- Account number
- Sort code
- Reference number
- Payment date
- Payment frequency (Monthly, weekly, date)
You can view, amend, and cancel any of your direct debits and standing orders from the Monzo app.
Paying in cash and cheques
Monzo may not have any branches, but that doesn’t stop you from paying in cash or cheques.
Pay in a cheque
To pay in a cheque to your Monzo account you will need to pop it in the post for processing:
- Write your eight-digit account number on the back of the cheque.
- Pop it in an envelope addressed to `Freepost Monzo’
It is free to post your cheque and it will take around 3 weeks for the money to appear in your account.
Pay in cash
Depositing cash into your account is a lot quicker than sending in a cheque. In fact, the money should appear in your account straight away.
You can deposit between £5-300 in one go, and up to £1,000 total every six months, or £500 every six months with a 16-17 account, into your Monzo account at any PayPoint.
- Let the shopkeeper know how much you would like to deposit.
- Hand over your Monzo card and the cash.
- The shopkeeper will swipe your card and return it to you with a receipt.
There is a £1 fee for making a cash deposit which Monzo will automatically deduct. For example, if you deposit £100 then it will add £99 to your account.
Monzo money transfers
To send a payment, head to the payment section of the Monzo app. If the person you want to pay is a Monzo customer and they are in your phone contacts, they will appear automatically in a list along with any frequent or recent people you have paid. Bank transfers to UK banks and other Monzo customers are free.
If you need to transfer money to a new person or organisation:
- Tap the ‘Pay by bank transfer,’ button.
- Select if it is a U.K. or international transfer.
- Enter their bank details and the amount you wish to pay.
They should receive the payment immediately but it can sometimes take up to four hours.
Transferwise provides international transfers for Monzo. You will need to select the country and currency you wish to pay and factor in the exchange rate, which the app will show you. Transferwise will charge you a small fee to process the payment, which it deducts from the amount you send.
If your friends or family owe you money for last night's meal, you can request a payment from them using the Monzo app. To request a payment:
- Go to the payments tab.
- Tap ‘Request’
- Find the person in your list of contacts.
If the person is a Monzo customer, you just need to enter the amount you are requesting and hit ‘Request’. They will get a notification on their phone with an option to approve the payment, and the money will be with you straight away.
If the person is not a Monzo customer or not in your contacts list, it will give you a website address that you can share with them. You can customise the amount you are requesting and add a note. The recipient will need to visit the site, enter the amount they want to send, and make payment with a credit or debit card. The money will be with you straight away.
Alternatively, anyone can send you a payment if they have your account number and sort code. They can then arrange a bank transfer with their bank.
UK card payments and withdrawals
It is 100% free to use your Monzo account within the UK. There are no fees or charges to use your debit card or withdraw cash from ATMs.
The only time Monzo may charge you for using your card is if you withdraw cash from ATMs that charge a fee, but this fee is from the ATM provider and not Monzo.
Using your Monzo card abroad
You can use Monzo cards anywhere in the world that accepts MasterCard. You do not need to let Monzo know that you are going abroad beforehand.
International card payments and withdrawals
It is free to use your Monzo debit card when travelling abroad. You will need to factor in the exchange rate, but when you make a payment abroad, you can check how much it charged you, in the Monzo app. The app will show you:
- The amount charged in the currency used.
- The exchange rate.
- The amount charged in pound sterling.
There is a £200 fee-free limit for withdrawing cash abroad over a 30-day period after which it will charge you a 3% fee each time you make a withdrawal.
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