21 min Read
01 May 2019

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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Monzo Review: Should you make the switch?

Monzo Review: Should you make the switch?

What is Monzo and is it a bank?

Monzo started life in 2016 as a prepaid MasterCard that could be topped up via its app and used to make free withdrawals abroad. The brand was founded by Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon and Gary Dolman, who all previously worked at rival Starling Bank.

It built up a strong following and transformed into a fully-fledged banking brand after getting authorisation from the Financial Conduct Authority (FCA) in 2017 and launched a current account. Its prepaid card has since closed, with users upgraded to its current account service.

Monzo markets itself as a bank that lives on your smartphone and is built for the way you live today (or in other words it is an app-only bank) and now has more than one million customers using its debit card to both manage their money and spending around the world. It even raised a record £1m in 90 seconds during a £20m crowdfunding campaign in 2018. Admittedly, this is something I was not comfortable with as effectively a loss-making entity invited customers to invest in its unlisted shares (unlisted shares are high risk by their nature due to the fact they aren't tradable on the stock exchange). They also drew criticism from the financial press which made accusations that Monzo allowed its customers to take part in the crowdfunding exercise using their overdrafts. However, that is a separate issue and one I've set aside when writing this Monzo review.

Should you join the Monzo banking revolution?

How does it work?

Currently, Monzo only offers personal accounts, either for individuals or jointly held, but it is working on a business version. Monzo offers all the usual current account services such as receiving your salary, setting up direct debits, standing orders, withdrawing cash with a contactless Mastercard and transferring money. But it also lets you manage your money as well as just hold it.

You can set up various “Regular Pots” to transfer money into and build up a fund towards set savings goals, plus you can set one to automatically receive the change from payments made on your debit card by rounding up your spending to the nearest pound - which is a great feature and one I will refer to as 'Save the Change' (that isn't Monzo's term for it). These pots don't earn any interest. However, Monzo has just launched "Saving Pots" where users can put money (with Investec) to earn 1% interest a year. However, there is a £1,000 minimum to open a Savings Pot. But it is a welcome addition and removes one of the previously glaring downsides to Monzo, which was that you couldn't earn interest on your money with them.

When using Monzo you can transfer money quickly and get spending notifications and set budgets for different categories with warnings when you come close to your limit.

Payments can be made on the go by linking your account with Apple Pay or Google Pay and the card can be used fee-free – other than the exchange rate - around the world.  You can withdraw up to £200 abroad every 30 days for free and there is a 3% charge after that. Monzo also links up with Transferwise to let users transfer money abroad at a cheaper rate than other banks.

Rather than having to phone a bank call centre if there are issues, customer service is operated through the app where you can arrange a callback (a nice touch). If you lose your card you can freeze it in the app and order a new one, or unfreeze it if you end up finding it.

Account holders can also apply for an overdraft, but can currently only borrow a maximum of £1,000. There is a 50p charge every day your account is overdrawn by more than £20, up to a maximum charge of £15.50 a month. Even if you don’t have an arranged overdraft, everyone has a £20 buffer built into their account to cover you if you go a few pounds overdrawn. You won’t get charged for using it, and if you go overdrawn by more than £20 you will receive an alert and have until midnight to add money and avoid charges. This is a more friendly approach than that used by many banks which just automatically charge customers.

Monzo also prides itself on user feedback and has a busy online forum where users can raise concerns or suggest new features. If you decide to use Monzo then make sure you read the forums as it will help you get the best from the product. For example, the automatic 'save the change' idea I referred to earlier used to be called 'Coin Jar' and it wasn't obvious how to set it up unless you found help within the forums. On the plus side, Monzo obviously took this feedback and made it easier to set up (as it is now). Being able to influence the development of your bank makes a refreshing change.

How do I apply for an account?

You need to be a UK resident to get a Monzo card but it is working on offering accounts internationally soon. You also need to be age 16 or over to get a card, which may also be lowered in the future.

There are no Monzo branches. The only way to get a Monzo current account is through your smartphone. You will need to download the app on either an Apple or Android device.

the monzo package                                         imagine if your bank was better - Monzo

You are met with inspirational messages about better banking and Monzo’s key features as you go through the process of signing up for the app. The first piece of information you need to enter is your email. Monzo will then send you an email so you can verify your account, which sends you back to the app to enter your name and date of birth, address and phone number. You will receive a text message with a verification code from Monzo once you have entered your number.

The app then uses Monzo’s back office anti-money laundering and credit reference systems to verify your identity and you will also need to provide photo ID, such as a driver's licence or passport, plus a five-second selfie video of yourself delivering a message it suggests. Don’t worry, you can redo the video if you are not happy with your performance.

Monzo identity verification                                          setting up a Monzo account

These documents are uploaded, and if approved it will ask where to send your new contactless Mastercard and you can also immediately setup your PIN. You are then officially part of the Monzo revolution and can start setting up your spending alerts and budgeting.

Is Monzo safe to use?

Monzo is fully regulated by the FCA, so like any bank it has to protect client funds and treat customers fairly. You also get the right to complain to the Financial Ombudsman Service if you are unhappy with how Monzo deals with any issues you raise. You also benefit from Financial Services Compensation Scheme protection on up to £85,000 of your money in a Monzo account if it goes bust. This limit raises to £170,000 on a joint account.

It would be hard for a scammer to set up a Monzo account on your behalf as they would need to have access to your email and phone to start opening the account and would need to complete the two-step verification process which requires having your passport or photo-card driving license plus also providing a selfie video message, which would be hard to fake.

Monzo fees and charges

There are no charges for opening or running a Monzo current account. Payments in the UK, cash withdrawals in the UK and payments abroad are all free – other than the Mastercard standard exchange rate - with no added fees.

If you are withdrawing cash abroad you will only be charged a 3% fee once you take out more than £200 in a 30 day period. The only time you may incur a fee in the UK is if you have a Monzo overdraft. An arranged overdraft costs 50p per day up to a maximum of £15.50 a month. Users also get the first £20 of their overdraft free. Monzo also provides this allowance if you don’t have an overdraft but may reject some payments.

There will also be charges if you are transferring money abroad. Monzo uses Transferwise for international payments, which prides itself on being more transparent and cheaper than banks. For example, it costs 0.4% plus a flat 80p transaction fee to convert pounds into dollars. In comparison, banks can charge around 5% on average for international transfers.

Monzo pros & cons

Monzo takes the hassle of setting up a current account. You don’t need to worry about finding a branch, making an appointment or printing and completing complicated paperwork. The whole process is managed quickly through an app at any time of day plus you can link it with Apple, Google and Samsung Pay so you can make payments easily both with your phone or the contactless debit card.

You get your own bank to carry around in your pocket as well as help with money management through its spending alerts and savings tools, and what’s more, you can use it around the world for free.

There are some limiting factors though. Monzo has a daily withdrawal limit of £400, which is a lot of money but there may be cases where you require more and there are no branches you can walk into for such a request. Monzo does consider one-off extensions though. There are also no ways of depositing cash over a counter, which some of its rivals offer (i.e Starling Bank).

Monzo does help you save money with its Pots tools, but you won’t be able to earn any actual interest on this money unless you have over £1,000, so it may be that some of your funds could be better used elsewhere.

Monzo is great for individuals, but unfortunately, there is currently no business offering, which others do provide (again Starling Bank).

Monzo Plus

Monzo announced the launch of a new packaged account on 23rd April 2019 called Monzo Plus. Monzo Plus is still in development and hasn't been fully rolled out so the features on offer are currently limited. Monzo claims it will be developing Monzo Plus over the coming year with more features being added so each customer can customise the benefits available to them.

Users are being encouraged to sign up to the waiting list to be one of the first to try it out and will qualify for a discounted rate of £3 per month (instead of £6 per month).

What do I get if I sign up to Monzo plus?

Currently, Monzo plus offers the following features:

  • a new Monzo Plus card in either their current hot coral or one of their new colours, midnight sky or lagoon blue.
  • a custom Monzo.me link
  • exclusive access to Monzo Plus events and swag (swag is referring to their clothing collection)

There will also be the opportunity to add some initial custom features to the core bundle:

  • Travel insurance (£4 per month)
  • Travel Money ATM withdrawal limit increase to £400 per month and access to emergency cash if your card is lost or stolen (£3 per month)

Monzo Plus has no doubt been introduced to challenge rival high street banks as well as the likes of Revolut, however it does come at a high cost for what seems to be a fairly basic set of features. Even customers who have loyally followed Monzo since startup have taken to Monzo's forums to question the value that Monzo Plus offers. If some of Monzo's loyal customers are yet to be convinced, it may be a tough task convincing others to upgrade. We will be keeping an eye on Monzo Plus and updating this article when more information becomes available.

Switch to a better energy deal with Monzo

Monzo has announced it is now possible to switch to a better energy deal by simply clicking a button within the mobile banking app. Monzo has partnered with OVO Energy and Octopus Energy, suppliers that offer competitive pricing and good customer service. OVO Energy was rated uSwitch energy supplier of the year and Octopus energy was rated energy supplier of the year by Which?

Switching is simple, once you click the switch energy message on the home page you will need to provide the following information:

  • Energy types (gas and electricity/just electricity)
  • Number of bedrooms
  • Meter type

Once you have answered the questions above you will be given a quote. If you provide meter readings / energy usage then the quote you receive will be more accurate. Once you have selected the quote you wish to proceed with, you can choose which Monzo account you would like to pay from. That's it, everything else will be sorted for you.

If your energy contract is not yet up for renewal, you can set a reminder to review the tariff when you are ready to renew. Monzo also claims to keep an eye on the energy market and notify you of any changes so that you can ensure that you are on the best deal after you switch.

Monzo Energy switching exclusions

You cannot switch energy provider with Monzo if:

  • You live in Northern Ireland - as they have their own energy providers that Monzo are not linked with
  • If you have a prepayment meter - the switching process is too tricky, so Monzo advises contacting the suppliers directly through their website instead.

Monzo Bank Customer Reviews

The bank has a strong following but is only rated as average on Trustpilot with three out of five stars, albeit from reviews based on just 524 users. Most of its reviews, 60%, rate the challenger bank as excellent, citing a good user experience and helpful budgeting features. However, 30% of reviewers rate it as bad, citing poor experiences with its live chat customer service and issues with accounts being closed.

Monzo Bank Alternatives

Monzo vs revolut

There are a few challengers to Monzo’s banking app crown. Revolut, offers free card transactions in 120 countries, fee-free transfers at the interbank rate in 23 currencies and free ATM withdrawals up to £200 a month followed by a 2% fee, which is slightly cheaper than Monzo. You can also buy Bitcoin, Litecoin and Ethereum cryptocurrencies through the Revolut app. It has a basic free package as well as £6.99 or £12.99 monthly packages offering extras such as higher withdrawal limits, overseas medical insurance and concierge services.

Monzo vs Starling Bank

Starling is probably Monzo’s closest rival. It lets you set savings goals and, unlike Monzo, even offers interest on your balance at 0.5% up to £2,000 and 0.25% above that. Starling also offers an in-app Marketplace so users can access other financial services and you can even apply for a loan. It is slightly ahead for entrepreneurs, offering a business account, although Monzo is working on one.

Monzo is a bit clearer on its overdraft charges than Starling, setting a limit of £15.50 a month and a £20 buffer, while Starling has an equivalent annual rate of 15%. Monzo’s app is slightly more intuitive and will inform you when your spending is getting too close to a set budget.


Monzo has become one of the leading challenger brands and app-only banks. Its app is simple to use and has great functionality but the inability to earn interest on all of your money will put some people off. Overall it is a handy app that makes banking far more friendly, understandable and approachable. Viva la revolution!

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