Monzo Review 2021: Cards, Rates and Fees – Is Monzo Safe?

With their low costs, amazing apps and great services, online banks are taking over the market. Monzo is a relatively new UK based bank that recently joined the crowded online banking sector. In this article I will review the services that Monzo offers, as well as its safety. Specifically, I will discuss the following topics:

  • Monzo personal accounts 
    • Monzo free current account
    • Monzo plus account 
    • Monzo Premium account
  • Monzo Business accounts
    • Monzo Business account Lite (free)
    • Monzo Business account Pro (paid)
  • Monzo overdraft and loans
  • Saving with Monzo
  • Is Monzo safe?
  • Monzo card abroad 
  • Monzo Metal card

Monzo accounts

Like most online banks, Monzo offers multiple account options and cards. Before diving into the details of the different accounts offered by Monzo, it is important to understand who can open a Monzo account. Monzo is a UK bank account and can only be opened by people with an address in the UK. It is important to note that you do NOT need to be an UK citizen or resident to open Monzo, the only thing you actually need is an UK address! This is still quite a limitation when compared to other European online banking services like Revolut and Bunq that allow people resident in many countries to open an online account. If you do not have a UK address, I would recommend taking a look at Revolut and/or Bunq instead of Monzo.

Monzo free current account 

Monzo free current account is the basic account offered by Monzo. This basic account is totally free! So if you have a low budget or just do not like to pay money for banking, a Monzo free account is probably the best option for you. Monzo free current account offers the following features:

  • A UK current account
  • Your money is protected by the FSCS (see more info about Moz safety here)
  • Free UK bank transfers 
  • Pots to spare money (no interests are paid!)
  • Notifications and app functionalities (including spending categories) 
  • Pay with your mobile device using Apple Pay and Google Pay
  • Free withdrawals abroad up to £200 per month

To summarize, Monzo free account offers a good basic bank account to manage everyday expenses. The main limitations of Monzo free are:

  • It costs money to deposit cash
  • No interest on savings
  • No travel and phone insurance 
  • Limited free withdrawals when using the Monzo card abroad 

If you are just looking for a basic free bank account with a nice app and Google/Apple pay, Monzo free is the way to go. If you are looking for something more advanced, like high interests on your savings, virtual cards and credit score reports, Monzo Plus and premium are probably a better option for you.

Monzo Plus current account 

Monzo Plus current account is an intermediate current account. This account will cost you more than the free version, but less than the premium account. A Monzo Plus account costs £5 per month and offers quite some extra features when compared to the free account.

Specifically, Monzo Plus offers all the free functionalities plus:

  • 1.00% AER/Gross (variable) interest up to £2,000
  • Holographic card
  • Virtual cards
  • Credit Tracker
  • Free withdrawals abroad increased to £400 per month
  • Auto-export transaction
  • 1 free cash deposit per month
  • See all your Monzo accounts together

As you can see, the main differences between the Free and the Plus account are free virtual cards, increased free withdrawal abroad with the Monzo card and advanced functionalities like data exports and credit score tracking.

Monzo plus also offers a 1% interest rate on your balance. But keep in mind that that is only applicable to the first £2,000 on your balance! This means that you will get a maximum of 20 euro per year in interest. As Monzo Plus account costs 60 euro per year, it is not a good idea to just get the Plus version for the interests!

Monzo premium account

Monzo Premium is the best (and most expensive) account offered by Monzo. If you are looking for a really exclusive account with the most advanced features, Monzo Premium is the right account for you! A fee of £15 per month is not exactly cheap but it is in line with the premium account of other online banks such as Revolut and Bunq. Monzo Premium account offers the same features as Monzo plus plus the following extra functionalities:

  • Metal card
  • Phone insurance 
  • Travel insurance for you and your family 
  • 1.50% interest up to £2,000
  • Discounted airport lounge access 
  • £600 per month free withdrawals abroad
  • 5 free cash deposits per month 

The most interesting features of Monzo Premium are the phone & travel insurance and the £600 free withdrawals abroad per month. For what concerns the very exciting 1.5% interest rate on your savings, do not forget that this is capped to the first 2,000 pounds of savings, so it won’t get close to paying back the £15 per month fee. To summarize, if you travel a lot or are quite unhandy with your phone and you need insurance for it, a Monzo Premium account is surely a good idea.

Monzo Business Account

Monzo offers both a free and a paid version of its businesses account. This is quite unique as most online banks only offer free accounts for private individuals, not for businesses. Having said that, the free Monzo Business account (also known as Monzo Business Account Light) only offers very basic functionalities. Let’s now take a look at the differences between the Pro and Lite business accounts and when it makes sense to use one or the other.

Monzo Business Account Lite (free business account) 

What can a free business account offer? Not much much more than a free personal account! Monzo Business Lite account offers basic functions such as:

  • A UK bank account and IBAN
  • Mobile payments with Google and Apple pay
  • Debit card 
  • Free UK bank transfers 
  • Scheduled payments
  • Pots to separate money 
  • Budget and categorise spending
  • Pay in cash and cheques
  • Digital receipts 
  • Free spending abroad 

As you can see, the Monzo Business account offers very similar functionalities to the free personal account. A nice extra feature that the Lite business account offers is free digital receipts. This function allows you to add receipts to your payments directly from the Monzo app. This is really useful for businesses to keep track of their expenses. 

To summarize, if you are a small business owner, Monzo Lite is a great (and maybe the only) opportunity to get a free business bank account. If you are looking for more advanced accountancy functionalities for taxes and invoices, the Monzo Pro business account is a better option for you. 

Monzo Business Account Pro (£5/m)

I have to admit that I am quite impressed with what the Monzo Business Pro Account offers for just £5 per month. With such a small monthly fee you can get access to some real advanced invoicing and accountancy functionalities such as:

  • Tax pots (Monzo can set aside taxes in pots for you in advance)
  • Integrated accounting with: Xero, FreeAgent, QuickBooks
  • Export your transactions 
  • Multi-user access (Ltds only)
  • Invoicing
  • 6 months free Xero and other exclusive offers 
  • All the functions offered by the free business account 

As I said, this is quite impressive for just £5 per month! In particular the invoicing functionality will really make your life easier and avoid you having to purchase another software for it. If you are using Xero, FreeAgent or QuickBooks for bookkeeping, the integration with Monzo will save you a lot of time! If you are not using these accountancy software, you can get a free 6 months Xero free trial with Monzo Pro for business. Not bad, right?

Monzo overdrafts and loans

As most banks in the UK, Monzo also offers credit services. Monzo credit services include overdrafts and loans but not credit cards. Let’s now take a look at the rates at which you can borrow money with Monzo.

Monzo Overdrafts

Monzo offers overdrafts with a variable interest from 19% to 39% yearly variable rate (EAR). The exact rate depends on your credit score (you can see that in your Monzo app). If you will use your overdraft for less than a year you will pay less interest proportionally. I am not a financial advisor and I will not give you any financial advice here, but I am not a big fan of overdrafts in general. They have really high interest rates and such a debt can put you in trouble. I would really recommend you to think twice before using Overdrafts. If I had to say something positive about Monzo’s overdraft, it would be that Monzo does not charge you extra fees (I mean, a 19 to 39% interest rate is already high enough..)

Monzo Loans 

Monzo also offers unsecured loans. Unsecured personal loans are loans offered to you without you giving any collateral to guarantee your loan. As for the Overdrafts, unsecured loans usually ask a very high interest rate and this is also the case for Monzo. Monzo offers loans up to £3,000 with an APR interest rate of 26.6% per year. Again, really think it through before getting a loan with such a high interest rate as it can easily put you in financial trouble!

Some positive features of this loan is that it offers flexible repayments and you can get the money the same day you ask for it.

Monzo Savings

So, getting a loan to buy stuff is probably not the best idea. Why don’t you just wait a bit and save money to buy that thing you like? Fortunately Monzo also offers the opportunity to save money with attractive rates. Short term saving (Monzo Easy Access) offers a 0.1% interest rate. If you choose to block your money in a deposit, you will get up to 0.45% (in case of a 12 months long fixed deposit). 

These savings rates are quite attractive nowadays. I particularly like the 0.45% interest on the one year savings account. Also do remember that all these rates are gross, so you will have to pay all applicable taxes on the realized interests.

Is Monzo safe?

It is very normal to ask “Is Monzo Safe?” before putting your savings in Monzo. The safety of a bank is probably the most important factor to consider when choosing a bank. Monzo is an UK based bank and your money on Monzo accounts (including savings) are protected by the Financial Services Compensation Scheme (FSCS). Although there is no such a thing as 100% safety, the FSCS compensation scheme makes Monzo a safe bank. If you are interested to know what the Financial Services Compensation Scheme is, you can take a look at the FSCS official website

Monzo card abroad 

Is it convenient to use Monzo’s cards when travelling abroad? Is Monzo a good account for people travelling a lot? Let’s discover this together!

Like most online banks, Monzo offers quite convenient rates when using the Monzo card abroad. Monzo does not charge any fees when SPENDING abroad. This means that when you will be paying abroad with your Monzo card, you will not be charged any conversion fee and the Mastercard’s exchange rate will be applied to your purchase. This is quite convenient as most physical banks charge a few percentage points on top of the basic Mastercard’s exchange rate!

You can always withdraw cash for free in the European Economic Area (EEA). For cash withdrawals outside the EEA, there is a monthly limit of £200. Above £200 you will be charged an extra 3%.

With no fees when paying and withdrawing (up to £200), Monzo cards seem very attractive to be used abroad. HOWEVER there is an important factor to keep in mind. Monzo uses the Mastercard’s exchange rate to exchange currencies. This exchange rate already includes a spread and it is therefore more expensive than the interbank exchange rate. This means that Monzo is not charging you anything for your paying abroad, but Mastercard is still charging you a spread!

If you plan to spend quite some money abroad you should consider using Revolut instead of Monzo as it uses the interbank exchange rate and does not charge you anything on top of it!

Monzo metal card

Do you like fancy metal cards? Then you should really go for a Monzo premium account! The Monzo metal card is offered to all premium account holders. Let me tell you, Monzo metal card looks really cool! This premium card is made of a single sheet of steel to give it a clean and premium look. The Monzo metal card weighs 3 times more than a normal card and the details are accurately engraved in the metal. Really cool right??

Conclusion on Monzo

Monzo is a UK bank offering all the financial services you might need: from metal cards to overdrafts and savings accounts. Monzo also offers great rates to use your card abroad and a completely free online bank account. Monzo offers all its services online, but the great app user interface and advanced functions will not make you miss bank branches! If you are looking for an 100% UK bank for a fair price, Monzo is the way to go!