Monzo Review: What Is Monzo? (Full Guide for 2019)
Today we are going to look at the new bank that’s been shaking things up – Monzo*.
I consider myself a bit of a budgeting pro, so I wanted to try out the new way of doing things with Monzo bank – I’ve tested it thoroughly for you!
I can share actual screenshots with you and guide you through how it’s going to work. This isn’t going to be your typical Monzo bank review.
Let’s get started:
What Is Monzo Bank?
Monzo is the new bank on the block. They are shaking things up as a digital, mobile-only bank.
No more heading to your local branch or writing out cheques! They believe these are obsolete, and that they are the bank of the future.
If you’re wondering who owns Monzo – it was founded in 2015 by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman – all who had met whilst working for Starling Bank.
It was originally called Mondo, but they had to change when another company with the same name challenged them on it. (I don’t know about you, but I think the name Monzo is way better!).
Did you hear about the Monzo crowd-funding? They hold the impressive record of the quickest crowd-funding campaign in history – they raised a whopping £1m in 96 seconds.
They are now valued at £2 billion – safe to say that they have a lot of backing right now.
They used to operate with a Monzo prepaid card, but they have stopped that now.
They have 4/5 star review on Trustpilot and are hugely popular right now.
I don’t know if you’ve looked at other Monzo reviews, but we’re going to show you a good overview now.
How Does Monzo Work?
Monzo* is a bank like any other – apart from the fact that it is all done on your phone. There is a Monzo app that you can download over in the App store.
Users are loving the fact that there are no physical branches that you have to go in to – it’s all very convenient.
The thing that I love best about Monzo though – and the reason that I would recommend this account – is for budgeting.
Spending Report
They give you a monthly spending report where you can see how much has been going in, and how much has been going out.
You can split it down into categories like:
- Bills
- Finances
- Eating Out
- Entertainment
- Family
- Holidays
- Transport
Every month, you are able to put together a budget on there and assign amounts to each of the categories.
If you’re more of a pen and paper kind of person, you can download my budget planner instead or as well as!
Put all of your info in, and it will do the calculations for you. So helpful!
This area is really helpful to show you where you are spending your money each month, and try and help you to stick to a budget.
If you are a newbie to budgeting, this can be a great place to start keeping track of your money.
Savings Pots
These are a massive plus for having a Monzo* account too – I am a big advocate of having separate pots for the different things that you are saving up for.
You can create a pot and start putting money in it straight away. You can have multiple pots on there and it’s up to you what you want to do with it.
They give the option of locking it away until a fixed date so that you can’t spend it too!
When you put money into your pots, these are now in separate accounts, which means that the money won’t show in your available balance.
There are 3 types of pots available:
- Flexible Savings Pot. Earn up to 1.15% interest. There is a Cash ISA option available and you can withdraw the next working day
- Fixed Savings Pot. Earn up to 1.66% interest. This is for savings of £500 or more, and you can withdraw on a fixed rate.
- Regular pot. This is best for if you just want to put money to the side of your main account. You can add and withdraw money instantly, for any amount.
When you are setting up a Pot, you can give it a name e.g. Holiday, Disney, Wedding, House (whatever it is that you’re saving for!), and a goal amount e.g. £1000.
I LOVE this, because I love to have the money that I am saving separate so that I can see my exact progress.
It’s kind of like an online version of the cash envelope system!
You also have the option to lock the pot – which means that you won’t be able to access it to withdraw any money. This is perfect if you find yourself usually dipping into your savings.
Another great option is that you can choose to Round up Transactions. When you spend on your main account, if there are any pennies on the balance e.g. £70.58, they will move the 58p into your savings pot.
I love putting any extra money into my savings – if you’re stuck for ideas on how to get some extra cash, I have a free money making email course that will get you started!
How Do I Apply for a Monzo Current Account?
Applying for a Monzo current account is pretty easy.
You will need to be a UK resident and over the age of 16 to get a Monzo card.
To start with, use this referral link*, and then head on over to the app store on your phone and download the Monzo app.
Once you’ve downloaded the app, you’ll have to enter the email address that you are going to be using for your account.
When you’ve entered your email address, it will ping you over an email so that you can click on it and confirm that it’s really you.
The next step is to enter your full legal information – your full legal name and date of birth.
You’ll also need to enter your home address for your account.
You’ll need to confirm the phone number that you want to use to associate with your Monzo account.
They want to know where to send your new bank card, so make sure that you put in the correct address!
When they know the best address to send your new bank card to, it’s time to choose yourself a PIN number.
Make sure that it’s something that you will remember, but something that other people won’t be able to guess either!
The next step is to verify your identity. Remember that although this all feels very casual because it’s on an app, it’s still a bank.
You can’t just go into any old bank and set up an account – you need to prove that you are who you say you are. After all, you wouldn’t want any person to set up a bank account in your name!
So, as this is a way that you can verify your identity without having to go into a physical branch (Monzo is done completely online).
You will need to upload either passport, driving licence or national ID. Then you will need to record a short video (3 seconds) of yourself. Simple!
During this process they will ask you if you want to take out an overdraft with them. I have got to admit, I don’t like how easy they make it for someone to take out an overdraft.
I also think they should mention that if you take out an overdraft they will do a hard credit check on you.
Look at the info about the buffer and how much you will be charged.
Once you’ve set it all up and they have confirmed your identity, you will be into your Monzo account! This is what it will look like:
Once you’ve received your card in the post (usually comes within a few days, may be a little bit longer), you will need to head on over to your Account section within the app to activate your card.
If you want to fully switch over to have it as your main current account, you can do so by using the Current Account Switch Service which will move all of your direct debits over for you.
They will also tell your employer that you have switched bank accounts and your salary will need to go to your Monzo account.
The switch takes 7 days, and they will also close down your old account for you.
Monzo Joint Account
It’s also super easy to set up a Monzo* joint account – you will need to both have a Monzo current account.
In the app, head to the ‘Accounts’ tab along the bottom. You will then want to click on your name at the very top which will have you into a screen that has your account info in.
Then, click on ‘Settings’ on the top right corner, and then click on ‘Payments with friends’ – and switch this toggle to on.
The next step is to head back to your Accounts tab and click on ‘Create a joint account’. Simple!
Is Monzo safe to use?
The money that you keep with Monzo is protected by the Financial Services Compensation Scheme (FSCS).
This means that you are protected by the UK Government (up to £85,000 or £170,000 on a joint account).
They are also regulated by the FCA, which means that they have to operate like any other bank in regards to protecting your money.
Monzo fees and charges
One of the things that you need to be asking yourself when signing up to a bank is what are the fees? You should try not to pay any money to keep your money somewhere!
You don’t have to pay any fees on your Monzo account. If you use the Monzo overdraft facility then you will be charged if you use it (50p for every day that you use it).
It’s also free to spend money when you are abroad, and it is free to withdraw cash abroad up to £200 every 30 days.
If you withdraw more than £200 in 30 days then you will be charged a 3% fee.
Using Monzo Abroad
One of the best things about Monzo* is the work that they have put into being used when travelling.
You can use your Monzo card abroad for free and withdraw £200 cash every 30 days for free.
However, after the 30 days you will be charged 3% interest.
You can check the withdrawal limits at any time if you go through the Accounts tab and then Manage card.
There is no separate Monzo travel card that is required – you just use your normal Monzo card, and you don’t need to warn them in advance that you are going abroad either.
If a cash machine asks you which account you’d like to use, they suggest choosing ‘Credit’ as this is the most reliable form.
Monzo Exchange Rate
When you are using your card abroad (or if you are using it online if you are buying in a foreign currency), then the Mastercard exchange rate will be used – without any additional fees from Monzo.
If you are being billed in the local currency, they use Mastercard’s exchange rate with a 0.0% fee.
Monzo Plus
Monzo Plus is their premium version of the bank, where you will pay a small fee for additional extras.
They are currently still building this, but they have confirmed that they will be adding add on features such as travel insurance and a higher ATM limit when withdrawing cash abroad.
Monzo Business Account
Monzo is currently in the stages of setting up a business account.
In February (2019) they launched a beta business account to 100 sole traders and limited companies.
You can join the waiting list for the Monzo business account here.
Pros and Cons
Pros
Monzo Golden Ticket
Another thing that I love about Monzo is their Golden Ticket!
This is where you can refer friends and you’ll both receive £5 if the person signing up uses your referral link. They will need to spend on their new card to complete the referral process.
Switch Your Energy Company With Monzo
Monzo have got it set up now where you can switch energy supplier with 2 energy suppliers – OVO Energy and Octopus Energy.
Both of these companies offer renewable energy and have been named uSwitch energy supplier of the Year and Which?’s recommended energy supplier of the Year respectively.
You should have the option pop up on your Home tab to switch to the energy deal. I don’t have that on mine – so I went to the Help tab and searched in there.
Turn Off Gambling Transactions
Monzo also gives the option of blocking gambling transactions, to help you stay in control.
Cons
Monzo Overdraft
Some people may see this as a pro, but I personally don’t want to encourage people to take out overdrafts.
In my opinion, Monzo is a great app, in particular for people who need help managing their money.
What I do like however, is that if you don’t have an overdraft, everyone has a built-in overdraft of £20. If you accidentally go over, you will get an alert through and you will have until midnight to put the money in there to cover it.
The overdraft fees are 50p charge every day your account is overdrawn by more than £20, up to a maximum charge of £15.50 a month.
However, you can switch off your planned overdraft at any time by setting the limit to £0.
Monzo Bank Alternatives
Monzo has some close rivals, and we can have a look at them below to see if you would prefer one of those instead.
Monzo vs Revolut
There are a lot of similarities with these 2 banks, but there are some differences as well.
They both have free current accounts and free mobile apps.
Revolut has some other options which include: borrowing money with P2P loans (although I would of course not encourage this), the ability to buy cryptocurrency, insurance options.
Some things that Revolut does though that are more of a negative include: £4.99 card delivery, you can only withdraw up to £200 if you have a regular account before you incur a 2% fee.
Starling vs Monzo
Looking at these 2 banks, they are very, very similar. I’m not surprised as the founders used to work for Starling, so they must know the best features!
The majority of people that I know that use Starling are using their business account – Monzo is still working on theirs.
Another positive for Starling is that they offer interest of 0.5% up to £2,000 and 0.25% over that. However, Monzo interest rate is 1%.
FAQ
Does Monzo have credit cards?
There are no Monzo* credit cards currently. They offer debit cards with their accounts.
Is there Monzo Apple Pay?
Yes, you can use Apple Pay with Monzo. To add your Monzo card to Apple Pay on your iPhone you will need to go to the Wallet app and click on the ‘+’ sign.
You can also go to the Accounts tab, click on ‘Manage’ and then ‘Add to Apple Wallet’.
To make your Monzo card the default on there you can hold down on the Monzo card and drag it to the front.
Where can I find my Monzo IBAN?
Currently, Monzo don’t have an IBAN. Booo! Not to worry though, you can still sort this out if you need it for international payments.
They recommend that you use Transferwise – the process is to set up an account, and transfer funds to them before transferring to Monzo.
You can also link your Transferwise account with your Monzo account to send money abroad.
Are there any Monzo careers?
Monzo are priding themselves on putting together the best digital bank, and they know that hiring the right team is a huge part of that.
They are based in East London, with offices in Cardiff and Las Vegas, but they have plenty of remote positions available as well.
The types of Monzo jobs sections they have include:
- Company operations
- Controls
- Customer operations
- Data
- Design
- Engineering
- Finance
- Hiring
- Legal
- Lending
- Marketing & community
- People
- Product
- Risk, compliance and Information Security
Monzo have some amazing perks for their workers (I’m totally jealous!) including:
- Free life insurance
- Salary review every 6 months
- The option to buy discounted shares at a later date
- They encourage everyone to work from home every other Friday and are ok with you working from home if you need to e.g. if your child is ill
- Private health insurance and paid sick leave
- Well-paid maternity, paternity and adoption leave
- Free lunch – twice a week, plus fresh fruit, biscuits, quality coffee, tea and soft drinks
- A discounted yearly subscription to the meditation app Headspace and weekly group meditation sessions
- In-office yoga and pilates each week, as well as occasional 5-a-side football games and other sports
How Does Monzo Make Money?
According to what they told their investors – in the short and medium-term, Monzo will make money by lending out deposits, without hidden fees or charges.
Long-term, profit sharing and affiliate fees on third-party products will be the main source of revenue.
Do Monzo Run a Credit Check?
If you are taking out a Monzo current account then you will not need to pass any credit scoring test, but they will run a soft check on you which leaves a fingerprint but won’t affect your credit score.
If you decide to take out an overdraft with them however, they will run a hard check.
Monzo Help
If you have any more questions about using Monzo or you have a problem, they have a Help section on the app that you can contact them on.
Do you use Monzo, or would like to give it a try?
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Hi, love this very detailed review. It really helps to tell people how things work and what you can expect. I like Mondo too and think that it will make a big dent in market share for banks. Thanks for all your writing.
You’re so welcome! 🙂