What is Moneybox?
Have you ever wondered what to do with that spare change rattling around your wallet? What if you could save or invest it? Moneybox has come up with a digital solution. Its app will round up purchases you make on your card to the nearest pound and put the spare change in a savings or investment product. For example, each time you buy your morning coffee for £2.50, Moneybox will round that purchase up to £3 and put away the 50p in your selected product. It also has a feature to boost these round ups by doubling the amount saved (so from 50p saved to £1 in this example) if you so wish. The idea is that these small bits of change eventually combine to turn into pounds and earn interest, generating savings while you spend.
How does Moneybox work?
You must be at least 18 years old to open an account with Moneybox. You will also need a national insurance number if you want to open a stocks and shares ISA, 95-day notice account or Lifetime ISA.
There is a separate app if you wanted to open a Junior ISA on behalf of a child or a relative who is under 18.
You can read about plenty of the Moneybox features on its website but you will need a smartphone to actually use the service. This is because you have to download an app that then links to your bank accounts that you will be spending the money with.
Once downloaded, you need to signup with your name, email, set a password and enter your phone number and date of birth. Moneybox will then get you to verify your email and create a five-digit PIN for extra security. The first task is to decide the type of account you want your spare change to go to. You can click on handy question marks to read articles addressing issues such as which account is best and the Moneybox support team is contactable between 9am and 5.30pm 7 days a week.
Once you decide on the type of account, you can select how to add money, such as through a deposit, round ups or a combination of both. You can start from as little as £1. Users are presented with a list of banks they can link with the app. Most are included and you will need to authorise Moneybox to access your account. If you already have your chosen bank’s app on your phone you will be redirected to automatically establish the connection, otherwise, you will need to enter the account details manually. Once connected, you will need to set up a direct debit so your money can be sent from your bank to the chosen Moneybox product.
Users can view their spending and what their transaction can be rounded to within the app, where you will also be able to make deposits. You can even round up credit card spending as Moneybox simply calculates what the round up will be when monitoring your spending across any bank or credit card accounts you connect to the app. Round ups and deposits are combined into a weekly savings total that is collected from your nominated linked bank account each Wednesday at midday and debited into the Moneybox product on the following Monday. Transactions will be rounded up automatically after two days but you can change the settings to do this manually and choose which transactions to round up anytime during the week.
You can set up several Moneybox products under one account so you could have your spending and round ups spread across a savings product as well as an ISA and pension. Moneybox supports the following banks for round ups:
- American Express
- Bank of Scotland
- First Direct
- Ulster Bank
- Yorkshire Building Society
The important thing to note is that the round up is taken via direct debit from your nominated bank account, even if the tracked spending occurred elsewhere (i.e. on your credit card).
Saving with Moneybox
|Product||45-day notice account||95-day notice account||Cash Lifetime ISA|
|Charges||None||None||None, but there is a 20% government charge on any withdrawals if not using the account to buy your first home or for your retirement.**|
|Features||Interest calculated daily and paid each month. Notice of 45 days is required for withdrawals.||Interest calculated daily and paid each month. Notice of 95 days is required for withdrawals.||Save up to £4,000 each tax year and get the 25% government bonus.|
*This includes a 0.5% AER variable rate, plus a 0.6% introductory bonus rate in the first year.
**The withdrawal charge is usually 25%, however, it has been reduced to 20% until 6th April 2021
Moneybox currently only offers three savings accounts but does promise more are on the way.
Moneybox savings accounts
45-day notice account
Savers could put their spare change into a 45-day notice account offering an annual equivalent rate (AER) of 0.45%. Interest is calculated daily and paid into your account each month. The product is provided by Charter Savings Bank, so benefits from the Financial Services Compensation Scheme protection if the provider goes bust, keeping your money safe.
You will have to wait 45 days if you want to make a withdrawal on the Moneybox savings account, which can be a long time if you need cash immediately.
95-day notice account
Savers could put their spare change into a 95-day notice account offering an annual equivalent rate (AER) of 0.60%. Interest is calculated daily and paid into your account each month. The product is provided by Investec, so benefits from the Financial Services Compensation Scheme protection if the provider goes bust, keeping your money safe.
You will have to wait 95 days if you want to make a withdrawal on the Moneybox savings account, which can be a long time if you need cash immediately.
Moneybox notice accounts offer competitive rates compared with other notice accounts on the market but are not the best and are also variable so could change at any point. Check out our article on the best notice accounts for the very best rates right now.
Moneybox Lifetime ISA
Alternatively, Moneybox offers its own Lifetime ISA for those saving to get on the property ladder or for those saving for their pension. The Moneybox Lifetime ISA lets you save your spare change while you benefit from tax-free returns as well as the government’s Lifetime ISA bonus of 25%, paid monthly. Moneybox’s Lifetime ISA offers a rate of 1.25% AER and is covered by the Financial Services Compensation Scheme (FSCS). You can save up to £4,000 each tax year and get the 25% government bonus, totalling an additional £1,000.
There are some limits with the LISA compared with just using the notice account. The LISA is only available to those aged 18-39 and those who are using it to buy their first home or save for retirement. You can use the Lifetime ISA to buy a house up to the value of £450,000 anywhere in the UK but must have had the account open for at least one year. If you need to withdraw money for any reason other than your first home or retirement, you’ll pay a government charge of 25% on any sum you withdraw. (This has been temporarily reduced by the government to 20% until 5th April 2021). If you signed up for a Moneybox Cash LISA on or after 17th August 2020 then the account is provided by Moneybox in partnership with Santander. If you signed up before 23rd April 2020 it is provided by OakNorth bank and if you signed up between 23rd April 2020 and 17th August 2020 it is provided by Investec. All of Moneybox's partner banks are protected by the FSCS. For more information on Lifetime ISAs, check out our article 'Lifetime ISAs explained'.
Investing with Moneybox
Moneybox has a number of investment options. You can invest your round ups or one-off amounts in a stocks and shares ISA or Lifetime ISA, a general investment account, pension, Junior ISA or socially responsible investing account.
You need to be 18 to open any of the accounts and all have different features but invest in a range of tracker funds.
What are the fees for investing with Moneybox?
|Stocks & shares ISA/general investment account/Investment Lifetime ISA/Junior ISA/SR investing account||Pension|
£1 monthly subscription fee.
0.45% annual platform fee.
Fund costs range from 0.12 % to 0.30%.
Ongoing fees for the socially responsible fund are higher than the standard global shares fund (0.18% compared with 0.12% per year).
No monthly subscription fee.
Annual platform fee of 0.45% up to £100,000 and 0.15% over £100,000
Fund costs range from 0.12 % to 0.30%.
Fee is waived for first three months.
ISA is limited to annual contribution allowance, currently £20,000.
Investors can put a maximum of £20,000 per week into the general investment account
|Pension is subject to annual and lifetime contribution limits.|
Stocks and Shares ISA
You can invest your full ISA allowance, currently up to £20,000, in a Moneybox stocks and shares ISA. Your round ups can be invested and grow tax-free in a cautious, balanced or adventurous portfolio, depending on the level of risk you are prepared to take. Moneybox doesn’t provide advice so you will need to read the descriptions of each portfolio and the key investor information documents to understand what you are investing in and how risky it may be. For more information on stocks and shares ISAs, check out our article 'Are stocks and shares ISAs really worth it?'. There is even a Junior ISA version so you can build up a tax-free pot from your change that your child can access at age 18. For more information on Junior ISAs, check out our article 'Best junior stocks and shares ISAs'.
This works similar to a stocks and shares ISA as your round ups go into one of the chosen portfolios. However, only those under 40 can open an account, although you can continue contributing until you are 50. You can also only invest up to £4,000 a year and will receive a 25% bonus from the government (up to £1,000). You are limited to using the product to purchase your first home or when you retire. If you need to withdraw money for any reason other than your first home or retirement, you’ll pay a government charge of 25% on any sum you withdraw. (This has been temporarily reduced by the government to 20% until 5th April 2021).
General investment account
You can invest in one of the portfolios through a general investment account. Unlike the ISA, the returns aren’t tax-free but you can put more away, subject to a £20,000 weekly limit.
Moneybox users can put their round ups towards their retirement and combine their old pensions into one pot. This is subject to the annual £40,000 allowance and lifetime allowance of £1,073,100 for contributions. For more information on the Moneybox SIPP and its new pension consolidation service read our article.
How does Moneybox manage its portfolios?
ISA, Lifetime ISA and general investment account investors are offered a choice of three portfolios from Moneybox, made up from a mix of low-cost tracker funds.
There is a cautious, balanced and adventurous portfolio that you can choose based on your attitude to risk and return. The portfolios use five tracker funds, the Fidelity Index World Fund, iShares Global Property Equity, iShares Overseas Corporate Bond Index, iShares Overseas Government Bond Index and Legal and General Cash Trust. The allocation to each of these funds is set depending on whether you choose the cautious, balanced or adventurous portfolio and you can also alter it yourself.
Investors can choose to have their round ups invested in a socially responsible option as well through the Old Mutual World ESG Index fund, exclusively available in the UK for Moneybox users. The fund tracks the MSCI World ESG Leaders Index and holds shares in global companies which are selected based on MSCI’s environmental, social and governance approach.
The Moneybox pension invests round ups slightly differently. It has three options for you to invest in. These are the Fidelity World Index Fund, Old Mutual World ESG Index fund or the BlackRock LifePath fund, which changes the balance of investments as you get closer to your retirement date.
Funds are selected on the basis of cost, how well the fund tracks its index and the reputation of the fund provider. This is reviewed annually, and, if necessary, adjusted at the end of each calendar year.
Moneybox’s portfolio performance
How does Moneybox perform?
Moneybox launched in 2016 so it hasn’t built a long-term track record yet. It is usually best to judge performance after three years or even five for those with a more long-term investment horizon. But the app has tracked how £1,000 invested in 2010 followed by contributions of £50 a month would have performed in its portfolios up to 2019.
- Your round ups in the cautious portfolio would be worth £9,055, with a strong 16.2% return in 2016 and growth of 1.1% in 2017, 0.6% in 2018 and 7.6% in 2019.
- Money in the balanced portfolios would be worth £12,511, despite a 2.5% drop in 2018, the portfolio increased 27.2% in 2016, by 7.3% in 2017 and 18.4% in 2019.
- Adventurous investors would have done better, with their portfolios worth £13,270 at the end of 2019. The portfolio increased by 27.6% in 2016, 9.1% in 2017, fell 3.5% in 2018 and increased by 20.9% in 2019.
You can read more about how Moneybox has performed on its website.
Moneybox vs Nutmeg
Robo wealth manager Nutmeg is more geared toward investors than savers. You can open a general investment account, stocks and shares or Lifetime ISA, Junior ISA or a self-invested personal pension. It uses exchange-traded funds and offers a range of portfolios linked to your attitude to risk. Nutmeg goes slightly further than Moneybox as users must complete a questionnaire that determines their risk level rather than having to decide for themselves. You can also set a goal and time horizon with the investment accounts on Nutmeg and track how well you are following it.
Nutmeg’s minimum investment is higher than Moneybox. You will need £500 to open an ISA, general investment and pension pot or £100 for the Lifetime ISA or Junior ISA. Nutmeg also offers a wider range of risk ratings and more choice of portfolios but you could end up paying higher fees depending on how much you are investing. Fees for Nutmeg’s fixed allocation account are 0.45% up to 100k and 0.25% beyond that, with an average investment fund cost of 0.17%. Its fully managed offering charges 0.75% up to £100,000 and 0.35% beyond that with an average fund cost of 0.19%.
Read our Nutmeg review to find out more about what Nutmeg has to offer.
Moneybox vs Moneyfarm
Moneyfarm operates in a similar way to Nutmeg and again is more geared towards investors rather than savers. It is a robo-adviser and will suggest a range of portfolios of exchange-traded funds based on your answers to a questionnaire that assesses your attitude to risk. It offers a pension, ISA and general investment account but there is no Lifetime ISA option.
Starting a Moneyfarm account is more expensive than the £1 minimum on Moneybox. You will need £5,000 as a minimum to start a Moneyfarm ISA, investment account or pension. However, if you do not have £5,000 to invest, Moneyfarm will allow you to open an account with £1,500 as long as you invest £100 per month via direct debit. Moneyfarm has a clearer one-size fits all fund structure. Investors in any account pay 0.75% up to £10,000, 0.60% on any amount from £10,000 to £50,000, 0.50% on anything from £50,000 to £100,000 and 0.35% on any amount over £100,000.
Read our Moneyfarm review to find out more.
Moneybox vs Plum
Plum is more similar to Moneybox as it is geared towards savings. You can download an app or set it up through Facebook Messenger and Plum will regularly analyse your transactions and identity your regular income and expenditure before calculating an affordable amount to save for you automatically. This is transferred into a protected virtual bank account so unlike Moneybox, your money won’t actually earn any interest but it is a way to build savings autonomously.
Saving with Plum is free but there is also an option to invest in an ISA for a £1 monthly fee and an average fund management and provider fee of 0.53% (this consists of a 0.15% fund management charge and provider fees ranging from 0.08%-0.90%). Plum offers 10 funds to choose from with varying levels of risk.
Read our Plum review to find out more.
Is Moneybox safe?
Moneybox is regulated by the Financial Conduct Authority so must follow rules on transparency and treating customers fairly. Customer details are kept secure and banking logins are not stored by Moneybox and it is a third party provider of Open banking technology. This means that if you use the round-up feature your bank details are kept safe and are never shared with Moneybox.
If you choose to invest then your money is of course at risk, as with any investment, from stock market fluctuations. But there is still Financial Services Compensation Scheme protection of up to £85,000 if a fund or savings account provider goes bust.
If you are unhappy there is also the option of complaining to the Financial Ombudsman Service once you have been through Moneybox’s complaints procedure.
Moneybox customer reviews
Moneybox has more than 250,000 customers so there is plenty of scope for reviews and good and bad experiences. Moneybox is rated 4.3 out of 5.0 from over 500 reviews on Trustpilot, the majority, 71% rank the app as excellent. Users cited how easy it was to setup and use and how it has been a great introduction to saving and investing.
The app has received some negative reviews, with 11% rating it as bad and 4% as poor. Most gripes appear to be over how long it takes for money to be invested, low savings interest and some individual issues over the timing and value of withdrawals.
Pros of Moneybox
- Great for beginners
- Save as you spend
- Quick and easy to set up
- Opportunity to earn rewards
Moneybox is a great way to start saving or investing. The idea of saving as you spend is innovative and the app lets you easily setup regular transfers and round ups. It is easier and quicker than sitting down with a financial adviser or scouring the market yourself for the best savings rates or ISA as everything can be done by the touch of a few buttons on the app. There is also very little saving or investing experience required as there are simple explanations of each product at every stage of the process.
Cons of Moneybox
- Investing change can take a long time to see any benefit
- Can be expensive
- Unable to move money between accounts
It may often be said that if you look after the pennies the pounds will look after themselves but only investing a few pennies or even just pounds each month will not be a silver bullet when it comes to saving. You typically need a lot more to build up a comfortable ISA or retirement pot as well as to spread your risk, which is why many of Moneybox’s rivals have minimum investments starting from £500 upwards. Additionally, investing small amounts means it will take a long time to see a decent return and the fund charges will be pretty hefty until you are putting away a more significant sum. Wealthsimple is a worthy alternative if investing in an ISA as it does not have a minimum investment and does not charge a monthly fee.
The Moneybox app is user-friendly but there is little help when it comes to your actual reasons for investing, which would usually help dictate how much you need to save and the way to do it, another reason to consider a robo-adviser such as Wealthsimple or Nutmeg. There is also an annoying restriction that doesn’t let you move money between accounts and you need a separate app for a Junior ISA.
Moneybox is a great introduction to saving and investing. It is easy to setup and use and will get you used to different financial products as well as the useful habit of putting money away regularly. However, this shouldn’t be relied on as your sole or long-term saving or investment source, especially if you are only putting away small amounts. If you are new to investing then you should check out our article 'The best stocks and shares ISA (& the cheapest fund platform)'
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