Monzo Flex review: is it the best way to buy now, pay later?

Online bank Monzo entered the Buy Now, Pay Later (BNPL) market with Monzo Flex back in 2021. The service allows customers to spread the cost of almost any purchase over 3, 6 or 12 months.

You can read our independent review of Monzo Flex to learn more about whether it could be a good fit for your finances.

What is Monzo Flex?

Monzo was the first bank in the UK to launch its own buy-now, pay-later proposition. Monzo Flex, as the name suggests, is designed to offer Monzo customers flexibility in how they pay for goods and services. Customers have the option to pay transactions in 3 interest-free monthly instalments, or, alternatively, over 6 or 12 instalments at 29% APR variable. There is no charge for making repayments early and there is also the option to move from 3 to 6 or 12 instalments if the customer is struggling to make the repayments.

Unlike some other buy-now, pay-later firms, which partner with specific retailers and are offered to customers at the checkout page, Monzo Flex is available on most transactions as long as you have enough credit.

Monzo Flex key features

• Users can spread the cost of transactions over 3 months, interest-free
• Payment plans also extend to 6 or 12 months at 29% APR (variable)
• Section 75 protection on Monzo Flex purchases
• Customers can go back over the previous two weeks and choose to spread the payments on past purchases 
• Payments can be managed via the Monzo app, with customers able to make repayments early, at no extra charge, or extend the payment period
• Use of Monzo Flex will be reported to the main credit reference agencies, Experian, Equifax and TransUnion, which means it is likely to impact users' credit ratings. This could be positive if it is used responsibly and payments are made on time but could have a detrimental effect if not

How does Monzo Flex work?

Monzo Flex works in much the same way as other buy-now, pay-later companies, such as market-leader Klarna, allowing customers to divide the cost of purchases into instalments. In the case of Monzo Flex, there is the option to pay in 3 monthly instalments without having to pay any interest, or, alternatively, to pay over 6 or 12 months, with interest charged at 29% APR variable.

Monzo customers go through a separate Monzo Flex application process, which starts with an eligibility check to see if you are likely to be approved. As this just involves a soft search on your credit file, it won't have a negative impact on your credit rating or be visible to other lenders. If you pass the eligibility check and choose to proceed, Monzo carries out a full credit check with one or more of the credit reference agencies, after which point you should be approved if the information you provided for the initial check was accurate and you meet the criteria. At this point, you are given a Monzo Flex credit limit and have a Flex balance listed alongside your usual bank details in the Monzo app.

When you want to make a purchase, you can opt to use Flex through the Monzo app, with the first instalment taken immediately and two subsequent payments taken at monthly intervals. You can also choose to move any payment from the previous two weeks onto a Flex payment plan of 3, 6 or 12 payments, with the initial payment taken and the remaining instalments refunded back to your account. There is no contactless limit on the virtual card and you can choose to flex any amount as long as there is enough available credit on your Monzo Flex account. You have the option of managing the payments through the app, making payments early or extending the repayment period.

What happens if you miss a payment on Monzo Flex?

Monzo states it doesn't charge a late fee for missed payments. Instead, it gives users a 7-day period in which to make the late payment, after which time it moves the plan from 3 or 6 months to 12 months. On that basis, it will then attempt to take the minimum payment - the equivalent of a monthly instalment on a 12-month payment plan - and you will be subject to interest at 29% APR variable. You will not be able to use Flex on any other purchases when you are behind on payments.

It is worth noting that late payments will be reported to credit reference agencies and so are likely to harm your credit rating. If you are persistently late with payments, your credit limit may be reduced or, in the worst-case scenario, outstanding debt could be passed on to a debt recovery agency.

Does Monzo Flex affect your credit score?

Monzo Flex is likely to affect your credit score with Experian, Equifax and TransUnion in the same way as any other credit product. As with a credit card or loan application, using the Monzo eligibility checker gives a good indication of whether you are likely to be approved, without leaving a hard "footprint" on your credit file. The full application, however, will appear on your credit reports.

In terms of using Monzo Flex, there is the capacity to use it to build your credit score if you demonstrate you can use it sensibly, make payments on time and stay within your credit limit. If, however, you miss payments, it will probably have a similar impact as missing credit cards or loan repayments.

Monzo Flex customer reviews

While there aren't specific customer reviews of Monzo Flex, Monzo itself has a decent customer satisfaction score with the review site Trustpilot, with a rating of 4.1 out of 5.0. It is rated as "great", based on more than 35,000 customer reviews.

Around 77% of reviewers gave Monzo a five-star rating. The positive reviews mainly centre on the features Monzo has that allow customers to monitor and manage their spending, as well as good levels of customer service.

A further 14% of reviewers gave Monzo a one-star rating. People complained about the poor customer service and issues with processing outgoing payments and having their accounts frozen.

How to apply for Monzo Flex

Before applying for Monzo Flex, you will need to open a Monzo account. You do this by downloading the Monzo app to your phone and following the onscreen instructions, including providing a valid ID. You can then apply for Monzo Flex via your new Monzo account.

Alternatives to Monzo Flex

When it comes to banks offering BNPL products, Monzo is unique in its offering within the challenger and app-only bank space. Challenger bank Revolut*, for example, offers a BNPL service in Europe, but not in the UK. This may change now that Revolut has a UK banking license.

The few banks that do offer their own BNPL service in the UK are typically high-street banks. The uptake has been poor in some cases. For instance, NatWest launched its own BNPL feature (NatWest BNPL) two years ago but is due to shut down the offering in May this year.

We explore some of the analogous alternatives below, ignoring popular standalone BNPL services like Klarna.

Virgin Money Slyce

Virgin Money Slyce works very similarly to Monzo Flex. It's a buy now, pay later model where you can pay in instalments over 3,6,9, or 12 months. If you pay in 3 months, you won't need to pay a fee much like if you pay off your Monzo Flex balance, the "loan" is interest-free too. As with Monzo Flex, there is no additional fees if you want to pay off your balance early or make an extra payment.

All in all, the product is very similar to Monzo Flex, but could work well if you're looking for a standalone solution that doesn't require a Monzo bank account. Virgin Money requires that you have a UK bank account to access Slyce, but you don't need to have a Virgin Money account. Check out our Virgin Money Slyce review here to decide whether it's right for you.

Barclays Instalments for Amazon

Barclays Instalments could work well if you're a frequent Amazon shopper looking to spread the cost of your purchases over £100. You can apply for a Barclays Instalments account via Amazon when making purchases or via the Barclays app. You'll be given a credit limit based on a credit check but you'll only need to apply once. After that, you'll be able to spread the cost of your purchases over a period ranging from 3 months to 48 months.

Unlike Monzo Flex and Virgin Money Slyce, interest could apply to these purchases. On occasion, there are special promotions for certain products with interest-free periods, so this product could work well in those circumstances. Like Monzo Flex and Virgin Money Slyce, you'll be able to make overpayments towards your loan at no additional cost.

Monzo Flex: Should you use it?

If you have a Monzo bank account, Monzo Flex is a great way to split purchases after you make a payment. Whether you're shopping online or in store, it's simple to go in the app and flex your payment for free as long as you pay off the full amount within three months. Beyond the three month period though, a 29% interest rate applies. Other products like 0% interest credit cards could work well if you're looking to spread your purchase over a longer period and save on interest.

Buy now pay later solutions aren't right for everyone. For instance, if you struggle to make payments on time, you might need to pay interest or additional fees. Find out more about BNPL here to decide whether this model is right for you before you consider taking out Monzo Flex.