Like 3 million others, I use a Monzo current account. I thought this account would be like all the others; a necessity, that facilitated me to make purchases. But Monzo’s changed how I view, spend and save cash. I’d say that Monzo is the best bank account out there and I’d recommend it to anybody that wants to become more accountable for their spending.
This article was written when Monzo’s £5 bonus for new sign ups was on a break. But it’s back, so if you want to open an account, click here for a free £5!
The hype surrounding this bank account
Monzo was founded in 2015, under the brand name Mondo. It was originally a prepaid card and you had to load money onto, before using it to make a purchase. Later, the company re-branded as Monzo and the card transitioned into a regular bank account.
Monzo accounts tend to be very popular with millennials and it’s a financial product that various money bloggers have reviewed; check out this this review for an in-depth guide, showcasing how to use the app.
Why did I start using Monzo?
I work with a handful of early Monzo adopters. And occasionally I’d hear whispers about Monzo and how easy it is to use. However, I’m a bit of an old stick in the mud when it comes to banking. I still use the first bank account I ever opened as my main banking provider (I know…). And although I’ve tried a lot of things to make and save money in the past, chasing bank account welcoming bonuses isn’t one of them.
However, when I was working out my post-maternity-return-to-work plan, I knew I needed a new account. I wanted something that would enable me to track my personal spending away from family expenses.
The set-up process for opening a Monzo bank account is really smooth. I downloaded the app, followed a few simple instructions and before I knew it, I got an alert to say that my card was in the post. A few days later, a coral-coloured bank card dropped onto the doormat.
Why do I love my Monzo current account?
I was something of a late adaptor when it came to signing up. But I’m really pleased that I now have a bright coral Monzo bank card in my purse. This card has changed how I spend and save money. I realise that’s a bold claim to make, so here’s why:
1) Instant alerts via the app
I get an alert through from Monzo as soon as I make a purchase and the money is taken straight off my balance. This has created accountability. It means that I can’t just spend aimlessly on my card and forget about it until the pending transactions are processed.
I use a budget planner at the start of the month and these instant alerts allow me to ensure that I’m sticking to it! The instant alerts feature is particularly handy if you’re looking for ways to save money on a tight budget.
2) Categorised spending
Every time you make a purchase, Monzo logs it within a category. The categories include shopping, bills, eating out, entertainment, groceries, transport, etc, etc.
Sometimes Monzo adds a purchase to a category and it isn’t quite right, but you can manually amend this on the app within a couple of taps.
The categories allow me to see how much I am spending on each thing. For example, I can click on the ‘transport’ key and see how much cash I’ve spent on buses, taxis and trains within a certain time frame. Doing this has enabled me to calculate if it’s worth me buying a season ticket to go to work. It’s also made me more aware of my Uber spending habit.
3) The ‘total spend’ feature
This is one of my favourite Monzo features. I can click on a retailer and see how many transactions I’ve made there, what the average spend was and how much I have spent there in total. This is really useful, because it illustrates, before my eyes, how quickly a coffee here and a bar of chocolate there can add up.
I used to spend £3 on rubbish in the M&S near work each day. It doesn’t take a brain surgeon to realise that £3 daily over the working week is £15, or £60 monthly, or £720 annually. But it’s hard to stick your head in the sand when you can see, quite simply and easily, how much you’re spending with each retailer.
The ‘total spend’ feature doesn’t stop me from treating myself occasionally, but it has reduced the number of mindless purchases I make.
4) Pay and request
You can send and receive money from pals when using the Monzo app. It’s quite simple to input somebody’s bank details and to send a payment manually. However, if one of your friends uses Monzo, then you can send money to them by tapping a few buttons. I’ve found this feature very useful when I’ve needed to pay a friend back for something. I also like how the transfer is almost instant. You don’t have to wait for it to clear.
You can split the bill with other Monzo users too, by as many ways as you need to. To do this, select the people you want to split with. Monzo then does the maths and sends the request through to your friend’s account. When they pay you, you can also send a thank you, which makes the app and the process much more personal.
With highstreet bank accounts, you often need to create additional accounts to split your money. But with a Monzo bank account, you can create different ‘pots’ to hold your cash in separate places within one account. This means that you can dedicate different pots for different things, like car maintenance, travel savings, or a maternity leave fund. However, like with most banks at the moment, Monzo’s interest rate is quite low, so I always transfer the balance of any long-standing pots over to my Nutmeg account, where I have a stocks and shares ISA, as well as a LISA. The amount I earn from these investments is much more favourable!
At the time of writing, Monzo will allow you to have up to 20 pots. However, this bank is very responsive and if they receive feedback that users want more or less, then I imagine they’ll tweak this functionality accordingly.
You can lock pots by telling the app that you’d like the money to be held until a certain date. I find that this functionality helps me to remain focused on my goal. But it is simple to unlock the money if you need to in an emergency. If you decide to unlock, then Monzo sends a pop-up message to ask if you’re sure that you want to dip into the pot. This extra step makes me think twice before I commit to unlocking.
It’s also possible to add different pictures to each pot. I like this personalised feature. I have a pot where I’m saving towards my son’s birthday and Christmas gifts and I have a picture of his Christmas sack as the pot image. It serves as a visual reminder as to why I’m saving.
If you wanted to up your saving game then you could link your Monzo account with IFTTT and take part in the 1p savings challenge. If you do manage to increase your savings, you should consider investing them (if you can afford to). I have a Nutmeg stocks and shares ISA and I’d recommend the account.
6) The round-up function
You can ’round up’ purchases on Monzo. This means that when you make a purchase, you can round it up to the nearest pound and save the difference.
For example, if you spent £4.80 in Tesco and you’ve activated the ’round up’ feature, Monzo would automatically say the purchase was £5 on your account log. However, if you click on the transaction, you’ll see that you’d actually spent £4.80 and that 20p went directly to your savings pot.
The round-up function has enabled me to simply save £53.61 over a three-month period. There’s been 114 round ups in total, averaging 47p a time. I’ve put it in a pot which I aim to spend at Christmas. I’ve not missed this money, but I imagine I will welcome it in December.
Monzo won’t round up if the purchase comes to less than £1. This is handy because sometimes companies check to ensure your account is active by withdrawing 10p and immediately refunding it. So I think that Monzo having a £1-minimum-roundup threshold is a smart move. It’s like they’ve thought of everything.
I’ve explained why I think this bank account it so wonderful, but you may still have questions to ask. Here are the answers to some of things you may be wondering about.
Is it really worth opening one of these accounts?
It’s probably pretty obvious that I’m a massive Monzo advocate. I love the different ways I can save and how personal the Monzo banking experience feels. There are other apps that can help to you save, including Plum. So if Monzo isn’t for you, then it’s worth investigating other options in the marketplace.
I wouldn’t recommend Monzo to those that don’t have a smartphone, as I don’t think you’d feel the benefit of the account. But if you’re competent at using apps, then you should give Monzo a try. I’m shocked by the impact my Monzo bank account has had on my financial health and habits.
But remember, if you do open a Monzo account, it should also only be part of your banking portfolio. I also have community credit union account and an investment portfolio with Nutmeg, including a stocks and shares ISA and a LISA. You should research different accounts to work out what’s the best option for you.
Can you do it all on the app?
Monzo doesn’t have highstreet branches, so you can’t just pop in and ask a question, or pay a cheque in on your way to the supermarket. If you do have a cheque to pay in, you’ll need to post it. But everything else can be done via the app and you can always phone Monzo, or send them a message if you experience a problem. In all the years I’ve had my account, I’ve never felt the need to see a representative in person.
Can you open a joint account?
You can indeed open a joint Monzo account, although this isn’t something I’ve done myself, so I can’t comment about how a joint account fares in practice.
To open joint account, you’ll both need to have Monzo current accounts and you’ll need to ensure that the person you want to open the account with is saved in your contacts. You’ll also need to ensure that you have ‘payments with friends’ switched on in the app. Once you’ve sorted those two things, you’ll be able to get started.
Are business accounts supported?
If you have a Monzo account, you can apply for a business account via the app. You’ll then be asked a few questions to see if your business is eligible. I haven’t used this service myself, so again, I can’t comment on the service. But I do know that it costs £5 per month to have a business account with Monzo.
You can also make some free money to put into your bank account.
Editor’s note: This post was originally published in April 2020, but it has been revamped for accuracy and comprehensiveness.