What is Monzo?
Monzo is a UK based digital bank with more than 5 million customers. In this guide, Latest Deals breaks down everything you need to know about Monzo accounts, and answers any questions about this digital bank.
What is Monzo bank?
Monzo is a digital bank that offers three different types of current accounts: Monzo, Monzo Plus and Monzo Premium. They also have options for joint accounts, 16 - 17 accounts for teenagers, and business accounts.
With all of these accounts your money is protected by the Financial Services Compensation Scheme (FSCS) up to £85,000, and Monzo offers award-winning customer support through their app. The idea is that you can spend, save and manage your money, all in one place: the Monzo app.
Pros and cons of using Monzo
|Quick application process||No physical branches|
|Fee-free spending abroad||3% charge for overseas withdrawals after £200 per month|
|Complete control of your card in the app||UK based only|
|Full bank account||Missing some options you’d get with a traditional bank e.g credit cards|
|Funds are protected by the FSCS up to £85,000|
The Monzo app
The Monzo app allows you to track your spending and saving in real time, so you can manage your money more effectively.
You can get notifications of activity on your account, and you’ll have instant access to your account with their app, so you can top up your savings, or make payments and transfers whenever you want.
The app also has some free features to help you manage your money better. These include:
The app allows you to set spending limits, so that you don’t spend beyond your means. You will get notifications if your direct debit payments increase for any reason, and for any payments you make, to help you keep track.
With the Monzo app you can create different savings pots to help manage your finances. You can have different pots for different goals, such as buying a house or going on holiday. You can name them to stay focused, and you can also lock or hide them to avoid spending the money you have already saved.
Get paid early
If you arrange your salary to be paid into your Monzo account and you’re eligible, you can get paid one day before payday. Essentially, Monzo will lend you the money before you get paid, which is helpful if you have any pressing expenses.
To be eligible to open a Monzo account, you need to be at least 16 years old, and live in the UK full time, with a UK address. If you’re not a UK citizen, you’ll need a residence permit to qualify.
Monzo offers three different types of current accounts, as well as a joint account option, and a 16-17 account.
These range from being free of charge to £15 per month, with varied minimum terms depending on which you choose. With all of the accounts, your money is protected by the FSCS, up to £85,000.
1. Monzo account
- Free of charge
- No minimum term
- Bright coral coloured Monzo card
This is the most basic type of Monzo current account, and offers saving, borrowing and an overdraft. With this plan, you’ll get fee-free UK transfers, pots for saving your money, instant notifications of transactions, customer support through the app, and you can use it with Apple Pay and Google Pay.
2. Monzo Plus
- £5 per month
- 3 month minimum term
- Ombre blue coloured Monzo card
Monzo Plus is the next step up from the basic Monzo account. With Monzo Plus, you’ll get all the perks of the Monzo account, plus lots more. You can track your credit score, get fee-free withdrawals abroad up to £400 per month, get 1% AER interest on up to £2,000 per year and more.
3. Monzo Premium
- £15 per month
- 6 month minimum term
- White Monzo metal card
With Monzo Premium, you’ll get all the benefits of the basic Monzo account, and the Monzo Plus account. On top of that, you’ll get perks including phone insurance, worldwide travel insurance, fee-free withdrawals abroad up to £600 per month, discounted airport lounge access, five free cash deposits per month, and 1.5% interest on up to £2,000 balance or regular pots.
Compare Monzo accounts
This comparison table outlines some of the key features on offer with the Monzo, Monzo Plus and Monzo Premium accounts. You can use it to compare the options available and find the current account that’s best suited for your needs.
|Monzo account||Monzo Plus||Monzo Premium|
|Minimum term||0||3 months||6 months|
|Fee-free spending abroad||Yes||Yes||Yes|
|Fee-free cash withdrawals abroad (3% charge after)||£200||£400||£600|
|Interest on account balance & pots||No||1%||1.5%|
|Instant spending notifications||Yes||Yes||Yes|
|Apple & Google Pay||Yes||Yes||Yes|
|Custom spending categories||No||Yes||Yes|
|Free cash deposits at paypoints across the UK (per month)||0||1||5|
Monzo Joint account
If you want to pool your finances with someone else, you may be interested in a Monzo Joint account. To sign up, both parties must already have a Monzo account, and you won’t need to go through any further ID checks.
You’ll get a new Monzo card for your joint account, and in your feed on the app, you’ll easily be able to see who’s paying for what, so you can keep track of your money. You can also set budgets for things such as groceries and bills, so you can see how much extra money you’ll have that month.
IMPORTANT NOTE: It’s important to bear in mind that you’ll be financially linked to the person you open the Monzo Joint account with. This means that you can be jointly credit scored, and their credit history could impact your own.
Monzo 16 - 17 account
A Monzo 16 - 17 account is designed for teenagers. It offers the majority of the same benefits as a typical Monzo account, with some blocks on age-restricted things, such as gambling.
You’ll get a full current account so you can send and receive money, set up direct debits and standing orders and save money, and you’ll receive a contactless debit card to make cash withdrawals and spend online and in shops.
With this account you’ll get benefits including:
- Monzo abroad - you can use your card abroad with no extra fees, and ATM cash withdrawals are free in the European Economic Area. For other countries, you can take out up to £200 with no charges, per month. After that, you’ll be charged 3%.
- Budgets - you can set spending budgets for things such as shopping and eating out. You can split bills through the app, and Monzo will let you know if you’re going through your budget too quickly that month.
- No fees and charges - you won’t be eligible for an overdraft until you’re eighteen. However, Monzo won’t charge you if you accidentally spend too much money and go overdrawn.
How to open a Monzo account
Once you’ve decided which account is suitable for your needs, it’s time to open your new Monzo account. To do so, you’ll need your phone and ID (for example, a passport or driving licence).
First, you need to download the Monzo app from the Google Play store or the Apple store. Then you need to follow the steps on the app, providing personal details such as your home address, email address, phone number.
Monzo will then need to confirm your identity, so you’ll be asked to record a selfie video. They’ll match this to your ID, to verify your account. Once this is complete, Monzo will post you your new bank card, and when you receive it, you can activate it on the app by entering your pin or taking a photo of it.
Monzo has various options for borrowing money, including buy now, pay later schemes, overdrafts and loans. It’s important to understand the options carefully before proceeding with them, as if you fail to repay the money you borrow on time, it could affect your credit score.
With Monzo Flex, you can spread the cost of purchases over three monthly installments at 0% interest, or over six to twelve monthly installments at 19% APR (variable) interest.
To access this feature, you can sign up via the app and you will be invited to join when it’s available. Monzo will run a soft-search eligibility check to see if you can be pre-approved for credit. If you continue with your application, a hard credit search will then appear on your credit file. This means that if you fail to make a payment with Monzo Flex, your credit score will be affected.
When you’ve applied to Monzo Flex, you’ll be given a credit limit that will depend on your credit history. You can use Flex on any payments you make with your Monzo account, and if you choose to pay the amount off before the installment time ends, you won’t be charged any early fees. If you’re worried you won’t make the deadline, you can extend it to a longer period of time.
IMPORTANT NOTE: If you miss a Monzo Flex installment payment, Monzo will give you seven days to pay it before taking a smaller amount from your account and switching you to a longer installment plan. If they are still unable to take payment, they will report the matter to relevant credit reference agencies. It’s important to bear in mind that this will negatively impact your credit score, which could affect you in the future, for example when you’re applying for a mortgage.
For short term borrowing, Monzo offers arranged overdrafts. You may be able to get an overdraft with a limit up to £1,000, and this will depend on your circumstances. Monzo will determine your overdraft limit according to your financial situation.
If you have an arranged overdraft, you won’t need to pay fees for going into it. However, you will need to pay interest on the overdraft limit, if you use it. The interest rate you pay could be up to 39% EAR/APR (variable), but this will depend on your credit score. You can see what your rate would be on the Monzo app.
You can change or cancel your arranged Monzo overdraft at any time in the app. You’ll need to pay back any money you’ve borrowed, plus any interest on it.
If you’re looking to borrow money on a longer term basis, you may be eligible for a Monzo loan. Monzo will ask you three questions to determine your eligibility, and if you’re successful, you can borrow money without affecting your credit rating. Currently, this service is only available on Monzo personal current accounts.
Benefits of the Monzo loan include:
- Five minute application process
- You can get a loan on the same day you apply
- No fees for paying off the loan early
- 24/7 customer support
- 7.5% APR (variable) on loans between £7,000 and £15,000
- 22.3% APR (variable) on loans less than £7,000
IMPORTANT NOTE: Bear in mind that the interest rate you are offered will depend on your circumstances. You can find out your personal rate before you apply for the loan.
Additional Monzo features
As Monzo is a digital bank, they offer various additional features that aren’t typically available with traditional banks.
With a Monzo card, you can spend abroad, with no extra fees. You don’t need to let them know you’ll be travelling, and you can use your card for payments with no extra charges on the exchange rate. They’ll even send you helpful information when you land in a new country, including what the current exchange rate is.
If you want to make cash withdrawals abroad, you can do so for free in countries in the European Economic Area. For other countries, you can take out £200 per month with no fees, and after that you’ll be charged 3%, for a Monzo current account. With Monzo Plus, you can take out £400 per month, or £600 per month with Monzo Premium before you’re charged.
Monzo has partnered with Octopus Energy and OVO Energy to provide this option, and both providers place a focus on renewable electricity. If you’re interested in switching energy providers, you can go to the app, find your profile, and fill out a form, giving details of your house and meter. You’ll then receive a quote from Monzo’s partners.
Octopus Energy and OVO Energy offer competitive rates, and if you’re happy with the quote and want to switch, they will switch your provider on your behalf. Monzo even offers a £50 credit for switching energy suppliers through them.
Whether it’s meals out, grocery shops, or cinema tickets, splitting bills can be a complicated process. Monzo’s solution is their bill splitting feature, which aims to make it easier to divide bills amongst friends and family.
All you need to do is go to the app, select the payment that you want to split, tap the option to add someone, and select who you want to split it with. You can do this by searching for ‘nearby friends’ if you don’t know their number, or through your contacts.
You can split the bill equally, or customise how you want to share the cost. Once you’ve done this, Monzo will send a request to the individuals to pay you, and when they have done so, you’ll get a notification.
Monzo business account
As well as personal accounts, Monzo also offers options for business accounts. They have two types of accounts, Business Lite and Business Pro.
Monzo Business Lite
This is the more basic option and is free of charge. It’s a full current account with web and mobile access available. You can open a Monzo Business Lite account, or switch accounts for free, and you’ll have access to 24/7 customer support.
Some key features of the Business Lite account include:
- Instant, free UK transfers
- Business debit card
- Real-time notifications
- Pots to separate funds
- FSCS protection up to £85,000
- You can pay in cheques and cash
- You can schedule payments
- No fees for spending abroad
- Security options that require payment approval
- Digital receipts
Monzo Business Pro
A Monzo Business Pro account is the next step up, and costs £5 per month. With this type of account, you’ll enjoy all the features of the Business Lite account, as well as these key benefits:
- Tax pots (these allow you to set a percentage to be used for taxes each time you get paid
- Free invoicing services
- Exclusive business offers
- Integrated options for accounting with Xero, Quickbooks and Free Agent
- Multiple users can access the account to manage funds together
- New account holders will get six months of free cloud platform service, which values £180
Is Monzo safe to use?
Monzo is regulated by the FCA, so is held to the same standards as a traditional bank. It must protect customer’s money and treat them fairly. If you have an issue with Monzo and you’re dissatisfied with how they handle it, you have the right to make a complaint to the financial Ombudsman.
You’re also protected by the Financial Services Compensation Scheme, which protects money in your Monzo account up to £85,000, if anything were to go wrong. If you have a Monzo Joint account, the limit rises to £170,000.
For your security, Monzo has various steps in place to prevent someone opening an account in your name. A scammer would need your email, phone number, ID, and a video message of you confirming you want to open the account to be successful, which would be difficult to achieve.
How to contact Monzo
If you have any problems with your Monzo account, you can use their 24-hour live chat service in the app for immediate assistance. If you would rather talk to someone, or your problem hasn’t been resolved to your satisfaction, you can use their customer service number and email.
Monzo customer service email: firstname.lastname@example.org
Monzo contact number UK: 0800 802 1281
Calling from abroad: +44 20 3872 0620
Monzo was named the Best Banking App at the British Banking Awards in 2019 and 2020. They currently have more than 5.5 million customers, and are rated ‘Excellent’ on TrustPilot. With more than 18,000 customer reviews, they have a score of 4.5 out of 5.