What is Monzo?

Monzo began in 2016 as a prepaid Mastercard that could be filled up through the app and used to make free international withdrawals. Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon, and Gary Dolman started the company after working at rival Starling Bank.

After receiving approval from the Financial Conduct Authority (FCA) in 2017 and launching a current account, it grew a significant following and turned into a full-fledged banking brand. Its prepaid card has since been discontinued, and customers have been transferred to its current account service.

Monzo bills itself as a bank that lives on your smartphone, and it currently has over four million clients who use its debit card to manage and spend money all around the world. During a £20 million crowdfunding effort in 2018, it even broke the record for raising £1 million in 90 seconds. To be honest, I was uncomfortable with this since it basically solicited people to buy in a loss-making entity's unlisted shares (unlisted shares are high risk by nature because they aren't traded on the stock exchange). Monzo declared historic losses of £113.8 million in July 2020, following a challenging year marked by decreasing interest rates and a worldwide pandemic.

Features of Monzo
  • Salary Sorter - When you are paid, divide your pay into three categories: spending, saving, and bills.
  • Spending budgets - Set spending budgets for other areas, such as eating out, and keep track of your progress during the month.
  • Savings pots - Divide your money into several pots to save for certain purposes. You may also set up automatic saving, which will round up spare change and put it to one of your pots.
  • Bills pots - From a bills pot, you may manage your direct debits and standing orders.
  • Instant spending notifications - When you spend, you'll get instant notifications so you can monitor what's going out of your account in real time.
  • Free cash withdrawals abroad - Cash withdrawals in the European Economic Area (EEA) are free, and you can take up to £200 per month abroad (a 3 percent fee thereafter).
  • No transaction fees - Spend money overseas for free, with no hidden fees or exchange rate markups.
  • Energy switching - If you transfer your energy supplier using the Monzo app, you may get up to £50 in credit.
  • Joint accounts - Create a joint account with someone else who has a Monzo account.
  • Overdraft - Monzo can help you set up a pre-arranged overdraft. You will be charged a variable rate of 19 percent, 29 percent, or 39 percent EAR depending on the amount you may borrow and your credit history.
  • Apple/Google Pay - Use Apple/Google Pay to pay with your Monzo card.
  • Loans - With Monzo, you may get a loan of up to £15,000.
  • Get paid early - A new tool that allows Monzo users to get paid a day early for their income or student loan. For more information, go here.
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  • Shared tabs - Split up several invoices and payments among pals, and keep track of who owes what.
  • International transfers - Monzo has teamed up with Wise to allow you to send money overseas without incurring any fees.
  • Monzo Flex - Monzo Flex is a new feature that allows you to buy now and pay later in 3, 6, or 12 installments.
Work System of Monzo

Monzo presently provides a number of account types, including personal, joint, and business.

Monzo provides all of the standard current account features, including salary deposit, direct debits, standing orders, cash withdrawals using a contactless Mastercard, and money transfers. However, it not only allows you to retain your money, but it also allows you to manage it.

Monzo also values user input and maintains a lively online community where users may voice their problems or suggest new features. If you decide to use Monzo, make sure to browse the forums since they will assist you in getting the most out of the service. It's a welcome shift to be able to affect your bank's progress.

Monzo Compared to other App-Based Banks

Monzo vs. Starling Bank

The two most well-known app-based challenger banks are Monzo and Starling Bank. They both provide comparable products: sleek applications with a variety of features to help you save and manage your money.

There are a few differences: Starling presently provides 0.5 percent AER in-credit interest on balances up to £2,000, and 0.25 percent on balances between £2,000 and £85,000, whilst Monzo does not charge interest on its current accounts. Starling also provides unlimited free international ATM withdrawals, whereas Monzo limits the amount you may withdraw before being charged to £200 in a 30-day period.

They're both excellent at assisting you in saving and keeping track of your finances, but there are alternative accounts that provide higher savings rates. In terms of international spending, Starling clearly outperforms Monzo.

Monzo vs. Revolut

Another big new app-based bank is Revolut. Revolut, like Monzo, has a number of services to help you manage your money, such as spending insights and notifications, but its concentration is very much on international banking. It offers customers the ability to retain and exchange 29 different international currencies, as well as fee-free spending, and is perhaps the most cost-effective alternative for international money transfers.

However, Monzo is clearly superior to Revolut in terms of domestic banking, given it charges no fees and provides essentials such as overdrafts and current accounts.

Monzo Accounts

Monzo allows you to establish both personal and joint accounts. Both account holders must first have a Monzo current account in order to start a Joint Monzo bank account. You can use the Current Account Switching Service to switch from a joint account to a Monzo joint account if you already have one (CASS).

Current Accounts

The Monzo personal accounts are compared in the table below.

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Monzo 16-17 Account

Monzo provides a special account for minors that allows them all of the flexibility of an adult bank account but with spending restrictions based on their age. The following are the primary elements of the Monzo 'teen' account:
  • Debit card with contactless Mastercard
  • Apple Pay and Google Pay
  • Notifications spent
  • Budgets for spending
  • Bills should be split.
  • Spending money overseas without paying any fees (the same limits apply as the personal account)
  • There will be no overdraft.
Monzo Business Account

For a long time, Monzo has been working on launching its business account, and after months of testing, it became available to everyone in early 2020. The essential features of the Monzo business bank account are shown here, but read our independent analysis for a more in-depth look at Monzo's Business account.
  • Instant bank transactions to the United Kingdom are free.
  • Notifications are delivered instantly.
  • Pots made by Monzo
  • Web and mobile access
  • Additional business tools that are incorporated
  • In-app invoicing and digital receipts
  • There are two account options: Pro, which costs £5 per month, and Lite, which is a free business account.
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Saving with Monzo

Monzo helps you to save money in addition to budgeting and money management. You may create numerous "Regular Pots" into which you can deposit money and establish a fund to save for specific aims. Monzo also offers a function that allows you to automatically contribute change from debit card purchases to one of your regular pots by rounding up your purchases to the closest pound. These savings pots do not yield interest, however Monzo offers three different types of savings pots:
  • Easy Access Savings Pot
  • Flexible ISA
  • Fixed Term Savings Pot
You may earn up to 0.10 percent interest on your money in the Easy Access Savings Pot and withdraw it the next business day. A minimum payment of £10 is required to open one of these pots.

The Flexible ISA has a 0.05 percent interest rate and allows you to withdraw money the next business day. You may deposit money at any moment and start with a £10 minimum deposit.

You may earn up to 0.93 percent interest in the Fixed Savings Pot, but there are restrictions on when you can access the funds. The earliest period is six months after depositing the funds, and the longest period is twelve months during which you are unable to add or remove funds from the pot. A minimum of £500 is required to start a fixed savings account.

Borrowing with Monzo

Monzo Overdraft

Account holders can apply for an overdraft, however they can only borrow up to £1,000 at this time. Depending on your credit score, you'll be charged a rate of 19 percent, 29 percent, or 39 percent EAR, but you can verify this before making the overdraft request using the Monzo app. If you don't have a scheduled overdraft and accidentally enter an unarranged overdraft, your monthly fees will be restricted at £15.50. Customers will always be notified before going into overdraft with Monzo, and you have until midnight to deposit money to your account.

Monzo Loan

Monzo provides loans to anybody who qualifies, and customers may apply for one using the app. Monzo asks you three questions to figure out how much you may borrow without hurting your credit score. Monzo offers greater transparency and control while requiring less effort.

Benefits of a Monzo loan include:
  • Application time is 5 minutes
  • You'll get your loan the same day you apply.
  • There are no penalties for paying off your loan early.
  • Chat or phone help is available 24 hours a day, 7 days a week
  • On loans between £7,000 and £15,000, the APR is 7.5 percent.
  • On loans up to £7,000, the APR is 22.3 percent.
It's important to remember that, like with all loans, the APR is an example and may not reflect the precise rate you'll be offered. You may find out your personal rate before you apply, according to Monzo.

At the moment, Monzo loans are only accessible on personal current accounts.

Monzo Flex

Customers may spread the cost of purchases over a number of months using Monzo Flex; 3 months are interest-free, and 6 to 12 months are charged at a variable interest rate of 19 percent APR. You may sign up for early access to Monzo Flex using the Monzo app, and you'll be asked to join when it launches. To assess if you can be pre-approved for credit, Monzo will undertake an eligibility check in the form of a soft search. If you apply for Monzo Flex, your credit file will be subject to a hard credit search, and if you default on a payment, your credit score will be damaged in the same manner as any other loan or credit product. Once you've applied, you'll be given a credit limit, which will likely change based on your credit score, and you'll be able to make as many payments as you like as long as they stay under your credit limit.

Monzo Flex can be used anywhere you use your Monzo card to make a purchase worth more than £30. You may also 'Flex' any purchases you've made in the past two weeks. If you pay the amount off before your installment plan ends, you will not be charged any early repayment fees, and you can also edit your installment plan to pay it over a longer period of time if necessary. If you miss a Monzo Flex installment, you'll have 7 days to pay; if you don't, Monzo will try to take a reduced amount and convert you to a longer installment plan. If Monzo is unable to accept payment, your account will be reported to the appropriate credit reference agencies, which will have a negative impact on your credit score.

Application for Monzo Account

To receive a Monzo card, you must be a UK resident, although the company is working on opening overseas accounts in the future. There is presently a waiting period for Monzo USA, and you must be 16 or older to receive a card, however this age requirement may be reduced in the future.

There aren't any Monzo locations. Your smartphone is the sole method to open a Monzo current account. You'll need to use an Apple or Android device to download the software.

As you go through the process of signing up for the app, you'll be greeted with motivational messages about improved banking and Monzo's core features. Your email address is the first piece of information you must submit. After that, Monzo will send you an email asking you to verify your account, prompting you to return to the app and input your name, date of birth, address, and phone number. Once you've submitted your phone number, Monzo will send you a text message with a verification code.

The app will then employ Monzo's back office anti-money laundering and credit reference systems to authenticate your identity, and you'll also need to supply a picture ID, such as a driver's license or passport, as well as a five-second selfie video of yourself delivering one of the suggested messages.

These papers are uploaded, and if authorized, it will ask where your new contactless Mastercard should be sent, as well as how to set up your PIN right away. You are now a member of the Monzo movement and may begin setting up expenditure alerts and budgeting.

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Monzo Fees and Charges

A Monzo current account has no fees for opening or using it. Payments in the UK, cash withdrawals in the UK, and international payments are all free with the exception of the Mastercard regular exchange rate. Monzo allows you to deposit cash at any PayPoint outlet in the UK, however there is a £1 fee. If you deposit £10, for example, just £9 will reach your bank account. You can only deposit between £5 and £300 at a time with Monzo, with a maximum of £1,000 per six months. If you're 16 or 17 years old, this drops to £500 every six months.

For foreign transfers, Monzo uses Wise (formerly known as Transferwise), which prides itself on being more transparent and less expensive than banks. For example, it costs £0.26 in transaction fees to change £10 into Euros, thus TransferWise will convert £9.74 into Euros. As a result, the beneficiary receives 11.35 at the current 2-hour guaranteed rate of 1.16564 (as of 20/09/21). You can compare the cost to other banks on the Wise site, and it says that it isn't always cheaper than other banks because they don't charge a transfer fee.

If you withdraw money outside the EEA, you will only be charged a 3% fee if you remove more than £200 in a 30-day period (the withdrawal limits are higher for premium accounts). If you have a Monzo overdraft, you will be charged a variable rate of 19 percent, 29 percent, or 39 percent EAR. If you have an arranged overdraft, you will be charged a variable rate of 19 percent, 29 percent, or 39 percent EAR. However, beginning in October 2020, Monzo will charge some customers extra fees, which will be detailed below.

Monzo has imposed increased prices for certain of its subscribers as of October 31, 2020. The following is a list of those fees:
  • If you withdraw more than £250 in 30 days in the UK or EEA, you will be charged a 3% fee.
  • Replacement cards cost £5 if they are lost.
The cost adjustments mostly affect Monzo customers who do not use Monzo as their primary bank account, as well as those who make frequent cash withdrawals or lose their bank cards. It is unlikely that you will be charged if you do any of the following:
  • At least £500 must be paid in every 35 days, and the account must have at least one active direct debit.
  • Every 35 days, deposit a payment from the Department of Work and Pensions or Communities, such as universal credit or a state pension, into Monzo.
  • Every eight months, have your student loan paid into a Monzo account.
  • Anyone who performs any of the following should have a shared Monzo account.
  • A Monzo Plus account holder is a person who has a Monzo account.
Is Monzo Safe?

Because Monzo is completely regulated by the FCA, it must secure customer funds and serve clients properly, just like any other bank. If you are unsatisfied with how Monzo handles any concerns you raise, you have the opportunity to file a complaint with the Financial Ombudsman Service. If Monzo goes bankrupt, the Financial Services Compensation Scheme protects up to £85,000 of your money in a Monzo account. On a joint account, this maximum rises to £170,000.

It would be difficult for a scammer to open a Monzo account on your behalf because they would need access to your email and phone to get started. They'd also have to go through the two-step verification procedure, which includes a passport or photo-card driver's license, as well as a difficult-to-fake selfie video message.


Monzo has established itself as one of the most popular challenger brands and app-only banks. Its software is easy to use and has a lot of features, however it does have some technical faults and errors. Monzo advised 480,000 users to change their password pins in August 2019 after a glitch enabled unauthorized workers to access them for six months. It did, however, reassure clients that no cases of fraud had been reported. This came after an outage in July 2019 that left customers without access to their funds for a few hours, the second such event in as many months.

Despite some teething troubles in the past, Monzo looks to be honest with its users and provides regular updates via its website, blog, and app.

Overall, it's a useful tool that makes banking considerably more approachable, comprehensible, and pleasant.