6 Things You Need To Know Before you Sign Up
Are you ready to bring your banking into the modern day and stop giving money to the big banks?
Monzo might be the answer, through its awesome app – or not…
In a few minutes you will know if Monzo is right for you.
And if not – Who might be better for your needs?
Disclosure: This post does not contain affiliate links but the website does. For more information, see my disclosures here.
- Registered bank – not just a prepaid card
- No proof of address needed
- Instant updates on purchases
- Split payments with friends who don’t even have Monzo
- £200 limit on free cash withdrawals outside of the UK
- Negative reviews report closed or frozen accounts without warning
- No in-app currency conversions
- Is Monzo Right For You?
- Fees, Exchange Rates and Hidden Costs
- Best Way to Sign Up for Monzo
- Customer Reviews (inc. Negative Ones)
- Bottom Line
Monzo is a London-based digital bank that serves the UK.
This has some advantages but also some potential disadvantages – It really depends on what you want, but we will expose all including analysis of their negative reviews (below).
In general, Monzo shares more in common with Revolut than any other service although Monzo is less focused now on travel and more-so on disrupting the old guard bank system.
However one thing that sets Monzo above their competitors is their core value: transparency
About the only service to compete with them on transparency is TransferWise which we compared with Monzo.
Apart from providing a card, app and services that are great to use, Monzo doesn’t shy away from a potentially-embarrassing mistakes. Instead, they come clean about internal security issues, bugs in their app, and glitches in their system. They don’t just claim to be transparent, they actually are.
Monzo’s transparency dashboard gives real-time information on system status, internal policies, press releases and annual reports.
Here you will find they admit to flaws and failures, and present all of their terms in an easy-to-read format.
In the world of financial institutions, Monzo is a rare and awesome bred.
1. Is Monzo Right for You?
For many, Monzo might fill the need for a modern bank account or for a travel Mastercard in the UK which you can manage through your phone.
Bank Account Stuff
- Direct Debits (Get paid a day early with direct deposit)
- Salary can get paid in (No top ups)
- Joint and Business Accounts
- Savings pots to manage your money better and pay you 1.7% interest
- Apply for loans up to £15,000
- Pay bills through direct debit
For other, Monzo might be a good Revolut alternative so can have a prepaid Mastercard to travel.
Prepaid Martercard Stuff (especially for overseas trips or shopping online)
- No fees on purchases
- Free ATM withdrawals (Over £200 outside the UK every 30 days will incur a 3% charge.)
- Instant notifications for purchases and personalised spending limits
- Live customer service chat
But wait there is limitations
1.1 Monzo as a bank?
As an app based bank Monzo has streamlined services but it does have limits.
If you want an online app that is highly-customizable to manage expenses and get paid, Monzo is potentially a great option.
However, if you like the ability to walk into a bank and speak with a teller in person, order checks, deposit cash, and have diverse banking and investment options (like loans over £15,000), Monzo is not the best option.
If Europe is your base (as opposed to the UK) N26 (review) is similar but European based and UK focused.
1.2 Can you use Monzo abroad?
Wherever Mastercard is accepted – which is pretty much everywhere except places like Cuba, North Korea and Bulgaria (which every card has trouble with). You may need to activate your magstripe to use some foreign ATMs.
However that does not mean they are the best option for you. If travel is the main reason for looking at Monzo you might also like to consider Revolut (review) and the TransferWise Card (review) which are more focused just on being travel cards.
1.3 Does Monzo work in the USA and Canada?
Yes, Mastercard is accepted pretty much everywhere in the USA and Canada. If you are a resident of the US, Monzo is starting an American service soon.
1.4 Does Monzo have joint accounts?
Yes. You’ll both need a regular Monzo account already. After that, opening your joint account takes just a few minutes.
1.5 Does Monzo have business accounts?
Yes, the Monzo business account has the same account features as a personal account and enables you to give access to directors, accountants, employees. You can also link to accounting software like Xero and FreeAgent and speak to a real person if required.
Also worth considering is Revolut or TransferWise for business as they often have more flexibility when it comes to holding and managing different currencies – links are above to our reviews for these two.
2. Fees, Exchange Rates, & Hidden Costs
Monzo claims to offer free international purchasing ability, but how free is free?
The only fee they charge (on their end) is a 3% service fee for withdrawals over ￡200 per 30 days in a foreign country.
This can be a fairly significant cost and £200 per 30 days is not a lot. For comparison, Revolut charges 2% up to £200 per 30 days on their free account.
2.2 Exchange Rate
Monzo uses the Mastercard exchange rate for currency exchanges. This is not the same as the interbank rate. There are no additional fees but the Mastercard rate is not as good as the interbank rate which Revolut (our review) and TransferWise (our review) use but charge differing fees on top of this (all three are much better than using a card from a bank).
3. Best Way to Sign Up for Monzo
Because there are no branches with tellers to verify your identity, you will be asked to submit a short selfie video when you apply.
The signup process is quick, and address verification is unnecessary, so you can open an account before you move to the UK and get your finances sorted out (however you will however need a UK address to send your card).
Once you have opened your account, you can start using the account.
After installing the app simply connect either Apple Pay or Google Pay, and you can start using your Monzo account the same day.
You can also get paid by your employer into your account.
Monzo has an impressive TrustPilot score of 4.5/5 stars.
While their positive reviews are glowing, it’s actually the negative reviews that show where the rubber meets the road.
Negative reviews for Monzo mostly revolve around frozen accounts, which is one of the ways Monzo prevents fraudulent activity. According to reviewers, Monzo can freeze accounts without warning for weeks on end while refusing to release funds.
This is concerning, because some reviewers were stranded in foreign countries with no access to funds.
However, it has to be said that this is not an issue isolated to Monzo – all prepaid Mastercards seem to have the same issue to different degrees.
In some ways is reassuring to knowing that anti-fraud measures are alive and well.
Perhaps the answer is to have a Monzo account with a backup traditional bank account (and low cost Credit Card) that you hopefully never have to use.
For comparison – from our analysis approximately 4% of Revolut‘s one star reviews on Trustpilot relate to frozen accounts. With Monzo the majority of one star reviews (13% of total reviews on Trustpilot) are related to frozen accounts. This higher number possibly relates to more stringent regulation due Monzo being a fully fledged bank.
Also worthy of note;
- There were very few complaints about hidden fees
- There were very few complaints about speed of service
A lack of both suggests Monzo delivers on their promises for free transactions and speedy service.
Given that Monzo is registered in the UK as a bank there are a lot of safeguards protecting you. For example, the money you put in your Monzo account is protected up to £85,000 by the Financial Services Compensation Scheme (FSCS) if Monzo was ever to fail. You can find out more about how FSCS protection works and see if your money is protected by the scheme.
In addition to this Monzo has a lot of security initiatives. For example Monzo asks you to verify your online purchases in-app or by text which helps ensure that you are holder of your phone, the card and the app.
Monzo have an impressive amount of features for managing your finances, but they are so amazingly transparent about which makes them very reassuring.
The only issue that may keep your from opening a Monzo account is if you value a traditional bank over a digital bank. It truly comes down to a pure decision over which services fit your lifestyle better.
However, you can also get the best of both worlds by opening both a traditional (low cost) bank account and a Monzo account.
Who says you can’t have it all?