Loot and Monzo are two big names in digital banking, but what do they offer and which is better?
So-called “challenger banks” are gaining customers rapidly; millions are now using Loot, Monzo, Starling and Revolut.
They offer snazzy apps, real-time spending information, and typically work a bit like your own personal finance assistant – reminding you that you’re close to your budget limit for eating out this week, for example.
Here we’ve analysed two of the big mobile-only banks, side by side.
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Loot and Monzo at a glance
|Fees and charges||Free||Free|
|Delivery speed||-||Between 2-7 working days|
|Payments||Works like with a standard bank app, takes up to 2 hours||Pay via bank transfer or send instantly to other Monzo account|
|UK ATMs||First two are free then £1 for each withdrawal after that||Free, limited to £400 a day|
|Spending insights||Not a feature||Spending tracker provides a breakown of how much you've spent and where|
|Overdraft||Yes - will be charged|
|Categories||Use #LootGoals to put money aside. Create a #LootGoal and save towards it.||10+ categories, regularly updated|
|Direct debits||No||Yes - future payments shown in homefeed|
|Top up||Add money using a debit card (including Android Pay and Apple Pay). Add money up to 5 times a week up to £250||Via bank transfer, standing order, or have salary paid in|
|Freeze your card||Can pause in app or report card lost/stolen||Yes: touch of a button in app|
|Alerts||Real time spending notofication and transaction list||Monzo's Targets sends notifications to warn if you're spending too fast. Dashboard changes from green to orange to red to indicate overpending.|
|Interest||None||Marketplace with 8 savings accounts both fixed rate and easy access, £500 minimum deposit.|
|Savings goals||Load in your spending per week and get a daily budget||Monzo pots let you put money aside, protected from your daily spending|
|Visualisation||Circle graphic shows how much left to spend in the day||Monzo uses a monthly graph and a pie chart to show the trajectory of your money, and how it is broken down|
|Foreign ATM withdrawals||Two free cash withdrawals per month, £1 thereafter||No ATM fees up to £200 a month. 3% charge over £200.|
|Foreign transactions fee||No fees||No fees|
|More Info||More Info|
Loot vs Monzo: The verdict
There are some key differences between these two apps; fees stand out as one, but there are others, too.
Fees are where Loot and Monzo really show their differences.
For those who believe cash is king, Monzo is probably the better bet. Cash machine withdrawals in the UK are totally charge free with Monzo. By contrast, Loot gives you two free withdrawals for the month, then charges £1 after that.
But if you travel a lot and withdraw cash abroad, Loot seems the better option on fees.
Monzo’s 3% charge after an initial fee-free £200 a month could start stacking up. Once again, Loot gives you two free withdrawals then £1 for each cash machine transaction after that.
But for those looking to get out a fair amount of cash each day (big families perhaps), Loot set a £250 daily withdrawal limit.
How they look on your phone
- Set budgets. Set budgets for the week or month with either. Loot is special in that you can actually set daily budgets.
- Categories. Loot and Monzo both automatically place your transactions into categories like groceries or eating out, which you set budgets for. The app reminds you if you’re close to overspending.
- How they help you save. Monzo’s “Pots” and Loot’s “Goals” let you put money aside for a particular saving goal. Perhaps you’ve had an eye on a hot tub for years but you keep frittering away the cash on coffees. Well, these apps could help you.
- Freeze your card. With either Loot or Monzo you get total control of your card through your app. Think it’s lost but you’re not sure? Freeze it temporarily while you have a look.
Other key differences
- Monzo offers an overdraft while Loot doesn’t. If you pass Monzo’s “soft” credit check (which doesn’t leave a trace on your credit file), you can get an overdraft of up to £1,000. It charges you 50p every day your overdraft is bigger than £20.
- Loot doesn’t have a banking licence. This means your money isn’t protected by the Financial Services Compensation Scheme, whereas with Monzo, you’re protected for up to £85,000 if the bank goes bust.