Challenger bank Monzo launches cash ISAs
Monzo’s customers can now open an ISA directly from the app.
Monzo has partnered with fintech giant OakNorth to launch a cash ISA (individual savings account) option. Consumers will need a minimum of £500 to open one.
Cash ISAs allow you to earn tax-free interest on your savings. There are several types (such as lifetime ISAs, stocks and share ISAs, and cash ISAs). Each person has an annual ISA allowance, currently £20,000, that is the amount they can pay into different ISAs.
Monzo’s easy-access ISA allows you to withdraw the money at any point when you need it. It pays a 1.14% AER (annual equivalent rate), which makes it quite competitive, although it isn’t the top interest rate available on the market.
For now, consumers can’t transfer money from an existing ISA into Monzo’s, but the challenger bank says it’s something they’re “hoping to introduce in the next few months”.
At the moment, the cash ISA is the only savings account offered by Monzo. The bank’s Savings Pots, which used to pay a 1% rate on sums from £1,000 up, were suspended in February after Monzo reached the savings limit it had established with Investec, the company providing them.
“We’re hoping we can make them available again soon,” said Monzo, but it has yet to give a timeframe for when this could happen.
Monzo is also looking to raise £100 million worth of funding from a US backer, The Sunday Times has reported. Negotiations are reportedly still in the early stages, but if they’re successful, Monzo would become the second biggest UK startup with a valuation of £1.9 billion.