Meet the poster child of digital banking.
Founded in 2015, Monzo is one of the most prolific players in the rise of digital banking, using mobile app technology to streamline your personal finance experience.
Here we take a look at all of the features of the Monzo card and app, from spending visualisations to how it handles overdrafts.
What is Monzo?
Billing itself as a bank “built for the way you live today”, Monzo operates without branches and offers a full current account and contactless Mastercard. They replaced its previous prepaid card, which has no longer been usable since 4 April 2018.
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How does Monzo work?
If you apply for an account, you’ll be issued with a bright coral contactless Mastercard.
The card is controlled via the app, which offers instant notifications when transactions are made.
To help you see where your money goes each month, all transactions are broken down into the following 12 categories:
- Eating Out
- Personal Care
How do I apply for a Monzo account?
UK residents aged 16 or over can apply for a Monzo account, either online via the website or through the app, available to download at both the Apple App Store and Google Play Store (though sadly not the Microsoft Store for Windows phones).
New applications are for a full UK current account and debit card; meaning that while the Mastercards that were issued previously could only be loaded from other bank accounts, Monzo customers will now receive an account number and sort code, enabling them to receive salary payments and bank transfers directly.
You can now also open a joint account with Monzo, as long as you both have a regular Monzo account already. You will both receive a new separate joint account card.
If you are 16 or 17 and want to open a Monzo account, you can access all of the same benefits that full UK current account users receive. The only difference is that certain actions are blocked, such as spending on activities that are illegal to under 18 year olds, e.g. gambling.
Signing up for an account does not involve a full credit check and therefore won’t affect your credit score.
How does the app look?
Using Monzo abroad
Monzo debit cards can be used abroad without having to notify the bank. There is no charge for point of sale transactions (such as spending in shops and hotels) outside of the UK. Similarly, there is no charge for making online payments in a foreign currency.
There is a £200 fee-free withdrawal limit for overseas ATMs – a 3% charge is applied to any withdrawals that exceed £200 cumulatively during a 30 day period. Be aware that the ATM owner may charge still charge a fee!
The usage of this fee-free allowance can be monitored within the app to prevent exorbitant holiday spending. All transactions in a foreign currency are made at the current day’s Mastercard exchange rate, offering a competitive rate that responds to the live market.
Monzo fees and limits
- Overdrafts: Monzo offers an optional overdraft to its customers. To activate an overdraft you can click “Overdrafts” in the app. Enter you address, previous addresses, salary, and Monzo will run a soft credit check on you. If you’re accepted Monzo will instantly set up an overdraft for you. The maximum is related to your salary and credit history. You’ll then be presented with an agreement, accepting the terms will leave a record on your credit history.
- Monzo charge a daily fee of 50p whenever you’re overdrawn by more than £20. If you’re using less than £20, you won’t be charged at all. The maximum Monzo will ever charge you in a month is £15.50 (where the month has 31 days). This means if you used the full amount of your overdraft for 90 days, the total amount paid would be £45. There are no other fees.
- You can reduce or switch off your overdraft limit at any time in the app, simply by sliding the scale to £0.
- This can be activated from the app and is approved on the basis of a full credit check (as opposed to the “soft” credit check required to open the account).
- Payments which exceed an arranged overdraft, or exceed the amount you have in your account are simply rejected.
- All UK cash withdrawals and payments are free of charge.
- The daily ATM withdrawal limit is £400 within the UK, with a monthly limit of £5,500.
Is Monzo safe?
The Financial Services Compensation Scheme (FSCS) is an independent statutory fund set up to safeguard consumer finances in the event of a bank being unable to meet its payment demands. Monzo has full FSCS protection which provides compensation for the loss of up to £85,000 – as is the standard for UK bank accounts.
What is a Monzo Golden Ticket?
A ‘Golden Ticket’ is Monzo’s name for its refer a friend system. Basically, it’s a link an existing customer can send to a friend inviting them to join Monzo.
Existing users get the Golden Ticket in their app, then copy and send the link by email, text, or messaging services like Whatsapp or Facebook Messenger.
Golden Tickets are supposed to make joining Monzo quick and easy. However, they’re not as essential as they used to be.
These days anyone can join Monzo in a matter of minutes. Monzo introduced Golden Tickets when it had a waiting list to join, so existing customers could help their friends jump the queue.
Pros and cons of Monzo
- No credit check.
- Full UK Current Account – Can receive salary, make direct debit payments and bank transfers, open overdraft.
- Instant notifications for transactions means you no longer have to wait like with normal banks
- Pots – Savings can be placed in to pots for particular purposes, which then won’t appear in the available balance and so won’t be used accidentally.
- Monzo.me- used to send and request money to and from those without a Monzo bank account.
- Ability to freeze account if the Mastercard is lost – then unfreeze if it’s found.
- Competitive Mastercard exchange rate and no overseas transaction fees.
- Get 1% interest on any savings pot over £1,000. Such a feature is a rarity for a challenger bank like this.
- No bank branches is less ideal for those who prefer face-to-face customer service.
- 3% charge for overseas ATM withdrawals (over £200)- other digital bank accounts (e.g. Starling) have no such charges.