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monzo card review
25 Jun 2019

Everything You Need to Know About Monzo, the Online App Based Bank

At the end of last year, Monzo was voted by customers as the best bank in the UK. The bank that’s getting millennials excited about banking is establishing itself as the new standard for digital banking.

From its early days as a pre-paid travel card to now having a proper banking license, Monzo owner Tom Blomfield has the goal to make Monzo the best current account in the world and to make it an intelligent hub for your entire financial life.

No branches, no queueing up for tellers. It’s all done online, or on the Monzo app. Is the new standard in digital banking for you? Keep reading for our Monzo card review to find out.

The History of Monzo

The challenger bank began in 2015 under the name Mondo. A year later, the name faced copyright issues and needed to find a new name. The bank did what it arguably does best – get input from their customers.

They asked customers for suggestions for their new name, and the only guideline was that it had to start with ‘M’. Customers voted, and Monzo took the winning spot.

At first, the company only issued pre-paid cards. The main perk, in the beginning, was to offer their customers a cheap travel card. It’s not that way anymore, but there are still other pre-paid card options if that’s what you’re looking for.

There were no service fees when using the card abroad, and exchange rates were no more than the market standard.

The card was also meant to help people budget better and keep track of their spending. People could transfer money to their Monzo card, and the app would tell them, in realtime, when they spent how much money where.

Though they offered free foreign exchange and making travel altogether cheaper, it’s interesting that this alone could stir up so much interest and excitement… about a bank. A bank that didn’t even get it’s full banking license until April of 2017.

In December 2017, Monzo had a waitlist 66,000 people deep. It took at least six weeks to even get approved to apply for an account.

Now, they’re operating as a fully-licensed bank and as of October 2018, they no longer allow customers to top up their accounts using their debit card. The goal of Monzo now is to become the primary debit card for their customers.

Benefits of Monzo

The older you are, the warier you might be about using an online bank. But the young generation is all for it. With everything happening right on your smartphone, the thought of never having to go into a bank branch again is quite appealing.

No bank queues? Cheap travel? Those two things alone are enough to convince the millennials and gen Z’s to hop on board. But those aren’t the only cool things about Monzo.

First of all, it’s easy as pie to sign up. Many people, especially expats who arrive in the UK, have an extremely hard time opening a bank account. A flat and a job aren’t enough for most banks.

Most banks require two, separate, official pieces of post as proof of address, which isn’t as easy to obtain as you’d think.

With Monzo, you just need to be aged 16 or over and be a resident of the UK. Then, you upload a photo of your ID to prove you’re you, and an introduction video to corroborate your ID.

They’ll take a few days to approve your account, and then voila! You’ll get your card in the post within the next week or so. Easy peasy. People moving to the UK should be told right away about Monzo. It will reduce a lot of headaches.

One of the other main goals of the bank is to make it easier for people to budget and organize their spending. With a lot of traditional banks, it takes days for purchases to appear on their online statements.

In the current digital landscape, there’s no reason for this to be the case. Owner Tom Blomfield saw this time lag as an opportunity to soar above his competitors.

The service works so quickly that when you make a purchase, it shows up in the app quicker than the till can print the receipt.

There’s no more need to wake up having a panic attic attack over how much you spent on the weekend. It’s all right there, in real-time.

Benefits of Monzo… Continued

Another major bonus is the ability to freeze and unfreeze your card, immediately. No more waiting on hold with the bank to frantically cancel a lost card. If you lose or misplace your card, freeze it on the app and it will be done that moment.

Find your card later in your coat pocket? Same thing. Unfreeze it, and it’ll be done right there and then. Monzo has eliminated a lot of the stresses around banking with its real-time service and paperless functionality.

Another great thing is you don’t have to notify Monzo if you’re traveling abroad. Most of us have experienced that. Forgetting to notify your bank and then having your card embarrassingly decline the minute you step foot in another country.

No longer. Monzo supports and encourages travel. So much so, that when you arrive in another country, you’ll get a notification to your phone welcoming you, and letting you know what the current exchange rate is.

The travel benefits of Monzo are above and beyond most other banks. When you use your card abroad, there are no extra fees whatsoever.

You can take out up to 200.00 per month while traveling with no service fees, any amount exceeding 200.00 charges a fee of 3%. That was actually decided by the customers.

Monzo put a poll out asking its customers whether they’d like to see a flat fee for unlimited withdrawals abroad, or a small percentage over 200.00. The people decided the percentage was a better deal.

Since most places take cards, Monzo figures 200.00 should be enough cash to cover you for the places that don’t. If you’re traveling somewhere you expect will prefer cash, you can still hit an exchange place before you go to stock up.

Is Monzo Safe?

The answer is yes. Especially now that it’s protected by the Financial Services Compensation Scheme (FSCS). If Monzo were to go out of business, the FSCS would compensate you up to their current compensation limit.

The current limit of the FSCS for all of the banks they protect in the UK is 85,000 for single accounts and 170,000 for joint accounts. The compensation would happen automatically. You wouldn’t have to do anything.

Monzo is a transparent company. You can even view the company’s development roadmap on their Trello board, which they’ve made public. That’s a respectable level of transparency from any company.

Monzo Card Review

Okay, we’ve gushed a lot about Monzo so far in this post. But it’s only because the benefits of the new challenger bank really are beneficial, especially for the young demographic who already does everything on their phone anyway.

Our overall review of Monzo is overwhelmingly positive. The only real drawback is that up until recently, Monzo didn’t offer interest on savings accounts like some of the big banks.

They have now partnered with another challenger bank, Oak North, and are now able to offer their customers tax-free cash ISAs and fixed-length savings accounts.

The caveat here is that Monzo is offering the savings accounts with an interest of 1.14%. If customers go straight to Oak North, the interest rate they offer is 1.44%.

The reason for this, a spokesperson explains, is that the convenience of having all of your accounts in one place is worth losing that extra 0.3% in interest.

Currently, roughly 25% of users have their salaries paid into their Monzo account, which indicates that 75% of Monzo customers still use other banks as their primary accounts.

Monzo is working to change this. Its goal is to become the standard, primary account for millennials. They have a long way to go to reach this goal, but there’s no sign that Monzo is slowing down any time soon.

They also don’t currently offer loans. They will approve overdraft limits for selected customers but they don’t currently offer official loans. As of now, you’ll have to go elsewhere for your installment loan, mortgage loan or other personal loans.

One thing to consider is that Monzo cards don’t currently accumulate travel points or spending rewards the way most credit cards do. But Monzo also doesn’t have any annual fees or charge any interest rates. Because they’re basically just a debit card.

All Monzo cards are debit/Mastercard. This allows customers to have the control of a debit account, with the benefits of using a globally-accepted Mastercard.

Monzo Financials

A few months ago, Monzo reached “unicorn status” when it secured another funding round of 85 million, along with a valuation of 1.3 billion. This is great news for the Monzo team, but it doesn’t come without challenges.

Their rapid growth has been hard for them to keep up with. Last year, the company reported a pre-tax loss of 33.1 million, which was four times higher than the previous year.

Many think one of the biggest reasons behind their partnership with Oak North, was to scramble to offer their customers tax-free ISAs and savings accounts.

Their in-app perks and cheap travel options haven’t been quite enough to convince the masses to make the official jump to Monzo as the primary handler of their financials.

The main business of Monzo focuses on convincing people to completely change how they view banks, and how to manage their money. It’s a big undertaking, and it’s an uphill battle.

Blomfield is optimistic though. In 2017, he predicted Monzo would have a billion users in 5 years and that they will undoubtedly become the primary hub for its customers’ financial lives.

In late September 2018, Monzo hit the one million customer mark. They have a long way to go to get to 1 billion, but they’re on a steady track.

Roughly 20,000 people per week are joining the platform, and the bank has processed over 4 billion in purchases. More than 12,000 is being spent using Monzo cards per minute in the UK.

Other Perks

The perks of Monzo seem endless. Another cool feature is the ability to split bills with other Monzo users.

It happens right there in the app, the only thing you need from your friend to split the bill is their phone number, which you probably already have. No need to send account information and codes.

They’ve also introduced a feature called Monzo.me to request money from people who don’t have Monzo. Making it as easy as ever to split bills.

We’ve already discussed the platform’s ability to help with budgeting, but it takes it one step further by categorizing your spending and making a budget for you, based on your previous spending habits.

It splits your payments into spending categories, including clothes, eating out, and entertainment, so it’s easier for you to keep track and monitor how much you’re spending on what.

Monzo is the end of wondering where your money goes. It’s a lot easier to curb your spending on clothes when you see the figure right in front of you.

They’ve also implemented a feature that allows customers to block payments from gambling sites. In order to remove the block, the customer will have to talk to a Monzo staff member who’s trained in addiction counseling.

To help you with saving, you can open a “pot” using the Monzo app. This allows you to put money away for specific things like trips, and it won’t appear in your balance to spend until you release it.

The Bottom Line

We all know how important it is to be able to trust our bank; they are the handlers of our hard-earned money. What everyone wants, on top of trusting their bank, is a stress-free platform and a service that’s easy to use.

Now that we’ve conducted our thorough Monzo card review, the bank has not only proven to be trustworthy and easy to use, but they also offer a wide range of other perks that most other banks do not.

The travel spending perks and the real-time budgeting service alone are enough for most people to jump on board. But now that they’re offering tax-free ISAs and savings accounts, Monzo has established themselves as a proper bank.

Do you have any more questions on the best ways to handle and organize your finances? Visit our resource center for more tips and advice.

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