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Monzo Bank Review: How to easily conquer your budget

18–21 minutes to read

In this Monzo review, we look at why this new plucky new upstart is becoming so popular and what makes it different from other banks. This new bank account promises to help you conquer your budget and reduce your financial stress. And in our opinion, it does an outstanding job, which is why it is a cornerstone of our Financial Fitness Programme.

That might sound like a big promise, but after using Monzo for over three years I can safely say it has transformed the way I budget, save and spend. However, I still have other bank accounts, so why haven’t I ditched the rest and gone ‘full Monzo’? Well, this review has everything you need to know.

What is Monzo bank?

Monzo is one of a new breed of digital challenger banks. Crucially, it has no physical bank locations. You simply manage your account through a friendly and easy-to-use mobile app.

Launched in 2015, Monzo now boasts over 5 million account holders. By comparison, Nationwide, established in 1846 and the UK’s largest current account holder, has around 15 million members. So whilst Monzo may have originally been a niche player appealing to the few, it’s certainly now graduated to the main-stream league.

The new-comer proved its mettle in 2019 and 2020 by winning the Best Banking App in the British Banking Awards. Interestingly, Best British Bank and Current Account went to close rival Starling Bank, Monzo’s biggest competitor (we compare the two later).

Read our Starling Bank Review here.

Heads up – We aim to produce honest and accurate content, however, we are not financial advisors. If you need financial advice, Unbiased can connect you with a suitable professional for free. Some of our links may earn us a small commission to help us run the site.

Why is Monzo bank different?

Originally, the younger, tech-savvy digital generation was at the forefront of the developer’s minds when building the app.  By building it from the scratch, it’s not had to accommodate legacy banking systems that were developed in the 80s and be hand-tied by the old guard banking mindset.

That being said, fundamentally Monzo is very much like every other bank account. You put money in and you take money out. The crucial difference is in how Monzo allows you to organise, budget and save your money all from an easy-to-use mobile app.

Monzo Benefits And Features

  • Get paid a day early – Monzo puts your salary in your account the day before payday. Handy if your budgeting took a hit this month and reduces unplanned overdrafts fees.
  • Salary Sorter – easily sort money between savings, bills and spending.
  • Pots for separating money – set money aside and plan for known expenses such as bills, holidays and Christmas so you don’t have to find the cash when the time comes.
  • Instant mobile notifications – get alerts when you spend or when you receive money. Useful to know when that friend has paid you back for coffee and also a nifty security feature.
  • Freeze your card – realised you lost your card last night? No worries, simply freeze it instantly from the app. Found it again down the back of the sofa? Chill, just unfreeze it again and you’re good to go.
  • Savings Pots – earn interest on savings.
  • Easy budgeting – set budgets against spending categories to ensure you stick to your desired budget.
  • Overdraft – available on request up to £3,000.
  • Loans – easy to access loans all via the app without the hassle (of course we’d always encourage healthy budgeting and saving to avoid expensive loans!).
  • Split Bills – out for dinner with friends? Easily split the cost with friends whilst at the table and make sure Dave pays his way this time.
  • Shared Tabs – set up a shared tab between friends, add transactions and settle up later.
  • Fee-free cash withdrawals abroad – take out up to £200 without charge (more for paid accounts).
  • Apple Pay and Google Pay – for hassle-free contactless payments from your phone at the checkout.
  • Joint Accounts – easily track your joint spending and saving with your other half.
  • Business Accounts – ideal for processing payments for your side-hustle.
Monzo Review - Monzo app

Monzo Plus & Premium Features

At its heart, Monzo is a free bank account with all of the juicy perks above. However, you can also upgrade to a paid account to access some very cool features.

Fundamentally, Monzo has three tiers of account:

  • Monzo Free – you get a bright coral (ie, pink) card and the features above.
  • Monzo Plus – includes an exclusive holographic card plus additional features listed below for £5 per month.
  • Monzo Premium – this time an exclusive white metal car,d plus even more features listed below for £15 per month.

For many customers, the free version is going to give you everything you need to help budget, save and master your finances. It’s also a handy way to try Monzo out before committing and paying for a Plus or Premium account.

Monzo Premium vs Monzo Plus

Monzo account features and charges compared

Let’s take a look at how the features compare.

Feature Monzo Plus Premium
A UK current account Included Included Included
Your money is protected by the FSCS Included Included Included
Get paid early Included Included Included
Salary Sorter Included Included Included
Fee-free UK bank transfers Included Included Included
Pots for separating money Included Included Included
Award-winning support Included Included Included
Instant notifications Included Included Included
Apple Pay and Google Pay Included Included Included
Spending categories Included Included Included
Fee-free withdrawals abroad £200 £400 £600
Credit Tracker (see your credit score) Included Included
See other accounts, in Monzo Included Included
Interest on your balance and regular Pots 1.00% 1.5%
Offers Included Included
Virtual cards Included Included
Advanced roundups Included Included
Auto-export transaction Included Included
Free cash deposits at PayPoints across the UK 1 5
Phone insurance Included
Worldwide travel insurance Included
Discounted airport lounge access Included
Price Free £5 per month £15 per month

Should I upgrade to Monzo Plus or Premium?

That all depends on whether you value the extras. For example, the five free cash deposits may be of limited value to most, unless you get paid weekly in cash. Similarly, £600 of free cash withdrawals abroad may not be worth paying for, unless you travel a lot for work.

Next, let’s consider the interest on offer here.

Is the interest rate worth it?

Monzo Plus costs £60 per year. But if you keep a minimum of £2,000 in your account all year (including your pots), you’ll get £20 back in interest. Therefore, this lowers the annual cost to just £40 per year. The question is; how realistic is this for you?

Monzo Premium costs £180 per year. This time though, if you keep £2,000 in your account for the year, you’ll get £30 back a whopping in interest. Now the annual cost is £150 per year.

So why pay for the perks?

Monzo Premium includes phone insurance and worldwide travel insurance similar to paid accounts from high-street banks. For me, these features make the premium account more attractive than the Plus account. I would have loved to see breakdown cover in the price like many high street banks have with similarly priced accounts.  However, you do get a shiny metal card, which you won’t get from one of the main providers. If you want to flex in front of your friends, then you may feel this combination is enough to swing it for you.

Personally, I have a Monzo Premium account. The features I use the most are virtual cards for online transactions and advanced roundups. Whilst I really like these features, I could easily live without them.

If you’re considering an upgrade to impress your friends with a unique card then you might be disappointed. I got more comments on my bright coral (pink!) card than I have from my metal card!

Lastly, paying for a Plus or Premium account gives Monzo the crucial funding it needs. Without selling lots of other expensive products like mortgages, it lacks the income that the bigger players enjoy. So if you want to see Monzo stick around, even if you don’t value all the features, then why not pay for an account and keep the dream alive?

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Using Monzo abroad

Fundamentally, Monzo is a great travel companion for a number of reasons.

Firstly, it’s cheap. You can spend with your Monzo card anywhere in the world for free. Importantly, Monzo won’t add any fees to the exchange rate (unlike high street banks). Monzo passes the Mastercards exchange rate directly to its customers. In addition, you don’t need to tell them in advance which means one less thing to do when you’re packing your suitcase.

Secondly, you can withdraw up to £200 (more for paid accounts) from foreign ATMs every 30 days. After this though, there is a 3% charge.

Lastly, when you land in a new country, the mobile app will send you an alert to advise you of the current exchange rate. Furthermore, even when you spend in this new country, your transactions will be categorised and you’ll be able to see a summary when you get back.

These are extremely useful features that traditional banks haven’t even thought of!

Budgeting with Monzo

This is where Monzo really stands out from the pack. Every time there is a transaction on your Monzo account, you receive a notification on your mobile. Then, the notification automatically categorises your spending, allowing you to get an instant financial snapshot of how you have spent your money over the month.

You can set budgets and limits around how much you spend and on what. For example, you may set a limit of £100 a month on clothes and £50 on eating out. This means you have a clearer view of your financial habits and a better chance of sticking to them. Traditional budgeting spreadsheet budgets are great for theory, but this app easily shows you what you have actually been spending on.

Overall, these tools are great for helping you to understand your spending habits and to plan accordingly each month. If used correctly this can help you budget, stay out of debt and plan for an emergency.

This is transparency and automation is why Monzo is the cornerstone of our Financial Fitness Programme. It’s a six-step programme designed to get your finances in shape and achieve your financial goals.

You can also learn how we use Monzo to manage our own budgets – How to Budget Like a Pro in seven simple steps.

Saving with Monzo

Monzo is certainly a useful account for budgeting. In addition, you can also use it very effectively to save. We detail this more in our Budget like a Pro article, so I’ll just go over the basics here.

Monzo Pots

These are ‘regular’ Pots and are a great way to stash money away that you might need in future. Personally, I have pots for Christmas, birthdays, holidays and home improvements. The set-up I have automatically saves money into these pots each month, which means it’s all there by the time I need it.

So, when it comes to booking a holiday or buying new sofas, I can draw down from that pot. It’s worth noting that you don’t earn interest in regular Pots, but you can gain instant access to your money when you need it.

For increased motivation, you can change the images on your Pots to reflect what you’re saving for.

Monzo Savings Pots

These are like the pots above, but with a few crucial differences. Firstly, you can earn interest. Behind the scenes, these are provided by other banks but are available via your Monzo app. As a result, these change from time to time and can include ISAs, fixed-term savings and easy access savings accounts. The second main difference is that the money if often locked away for a fixed-term. Even if it isn’t, it can still take a few days to withdraw.

Monzo Plus and Premium Savings

Plus and Premium accounts offer decent savings rates on current account balances up to £2,000. However, because of this limit, the amount you can earn is also limited. As a result, the interest from either account won’t cover the annual account charges. Therefore, it doesn’t make sense to upgrade for this reason alone.

Monzo Round-ups

A very handy feature that allows you to automatically add money to one of your pots. Enabling this men’s that every transaction is rounded up to the nearest pound and the difference deposited into a nominated pot. This is a neat feature that can allow you to save money easily without really noticing.

Advanced Round-ups, available with the paid accounts only, allow you to put 2, 5 or 10 times as much spare change into Pots every time you spend and turbo-charge your savings.

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Using Monzo bank

Monzo can be used like any other bank account. You get a contactless card, it works with Apple and Google Pay, you can transfer money easily in and out and it can handle standing orders and direct debits.

Furthermore, Monzo allows you to easily transfer money between known contacts in a similar way to WhatsApp. Monzo looks at your phone contacts and checks to see if they are also using Monzo. If they are, then there is no need to exchange bank details. Simply send the money via their contact image which is shown in the transfer section of the app. Very handy.

A further enhancement to this is the ability to pay contacts near you. You can use Bluetooth to transfer money to other Monzo users in close proximity.

To get the most out of Monzo bank account you really should use the budgeting tools to manage your money and assess what your spending habits are. Also, if your friends are using Monzo, it makes splitting bills and minor payments really easy. However, if you have no interest in this then really it’s just a striking bright-coral (ie, hot-pink) card!

How I use my Monzo account

Monzo has a range of strong budgeting features which make it a great account for your spending money. I use Monzo exclusively for my day-to-day spending and keeping my budget under control. we refer to this as my Spending Account.

Separately, my wages are paid into an account from a high-street bank. Yhis is known as my Bills Account and is where my direct debits for bills are taken from (eg, mortgage, utilities etc). Once bills and savings are taken care of, my spending budget for the month is then automatically moved to Monzo by a bank transfer.

This helps me easily see how much spending money I have left for the month without worrying that I’m going to spend the money I need for my bills.

Many people struggle to budget a full month of spending money. To help with this, you can break it down and pay yourself a spending allowance each week or fortnight. Trust me, breaking your budget down like this can really help you keep your finances under control with no spreadsheets and no stress.

If you want more detail on how we budget, check out Budget like a Pro in seven simple steps.

Why is Monzo different?

I’ve talked about why I love budgeting in Monzo and how it’s different to high-street bank accounts, even if they are catching up. To help illustrate this, we’ve created the image below to show the different app experience between Nationwide, one of the UK’s most popular accounts, and Monzo.

The Nationwide app is simply a statement. Remember? Those things we used to get in the post made form trees? This is the digital equivalent. It shows money paid in and money paid out, but that’s about it.

Monzo, by comparison, breaks down your spending. It allows you to see if you’ve overspent this month as well as what you have spent money on. Do you think you spend too much on eating out? Don’t bother going through your statements. Simply click on the category and see how much you spent.

Personally, I hate the actual process of traditional budgeting. It’s boring and time-consuming. I don’t want to spend my evening going through my statements and beating myself up for buying Starbucks once a week. With Monzo, I can see how much I have spent, how much I have left and adjust my spending accordingly.

Don’t believe me? Well, you’re not the only one. When I was first told about Monzo, I didn’t see the benefits. I thought I had my budgets under control and I liked my Nationwide account. I was wrong. I should have listened. Using Monzo as a spending account has transformed my finances.

Monzo review - budgeting with Monzo

Monzo energy switch

According to Monzo, over 50% of people in the UK pay too much for their energy. Monzo wants to help lower this number and makes getting a better deal on your energy tariffs a much easier process.

Monzo has partnered with OVO Energy and Octopus Energy, both of which are highly rated providers. If you switch to Octopus Energy with Monzo, you will get a £40 credit on your account and if you want a little bit more, why not use our link and get £50!

Octopus Energy Review: Great value green energy (plus £50 free)

There is a simple process to follow that you can get access from your profile page under “Monzo energy switch service”. After you answer a few questions, you receive a quote where you select the best-fit tariff. After that, Monzo will take care of everything else. If you are still in contract with your current provider, you can enter the end-date and Monzo will even automatically switch you at that time.

Whilst Monzo admits that these suppliers might not necessarily be the absolute cheapest, they offer competitive rates combined with top-level customer service.

Remember though, while this might make switching easy and save you money, reviewing your energy bills should be a standard annual task you have scheduled. Fundamentally, you should never be on a standard tariff. If you struggle to find the time then this service could help, but doing a review of the market yourself may be even cheaper.

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Monzo customer support

The lack of a physical branch can put some people off. I know it did me initially.

True, Monzo doesn’t have high-street banks, so you can’t pop in and talk to someone about your account. Relax though, as there is a UK freephone telephone number, email address and chat built into the app though.

  • Customer support: 0800 802 1281 (020 3872 0620)
  • Chat: in the app under “Help”
  • Email: [email protected]

Our test call was picked up within 10 seconds when calling Monzo’s support number. Very impressive. In truth though, we’ve never had to access any support. Using the service through the app has always proved reliable with no need for help.

Is my money safe with Monzo?

Yes, because Monzo has a full UK banking licence, which it received in April 2017. This means it is controlled and regulated just like any other licenced financial institution in the UK. Monzo is authorised by the Prudential Regulation Authority (PRA) and regulated by the PRA and the Financial Conduct Authority (FCA).

Furthermore, your cash is protected by the Financial Services Compensation Scheme (FSCS). This ensures up to £85,000 of your money is fully protected and guaranteed by the British Government. The FSCS has a specific Monzo page detailing its protection (which it has for most big banks).

The regulation is there to help you get your money back if something happens to Monzo. However, a far more likely issue is fraud. If your card is lost or stolen, or you spot anything unusual, you can freeze your card instantly. Combined with instant notifications that alert you when money is spent or withdrawn, you can stop a problem before it becomes a bigger issue. If you find your card later you can unfreeze it, all from the app.

Crucially, not every digital bank has this banking licence and is therefore not protected by the FSCS, so always remember to check this during your research.

Monzo bank reviews

Monzo has a devout base of superfans who rave about how great the bank is. Some fans have also become investors when Monzo raised money through crowdfunding.

On top of that, Monzo has received some of the best customer reviews we have seen for a mobile banking app. In addition, great customer service is backed up by independent review site Trustpilot and the industry’s regulatory survey from Ipsos MORI.

Monzo customer reviews

Trustpilot – 4.5 out of 5

iOS app store – 4.5 out of 5

Google Play store – 4.9 out of 5

Regulatory survey of UK banks by Ipsos MORI (source)

Monzo Review - Best current accounts

Monzo bank alternatives

Whilst Monzo may be one the best-known digital bank players, there are other options that are worth considering.

Monzo vs Starling

Monzo’s closest competitor is Starling Bank. Interestingly, Monzo was actually founded when some of the management team left Starling to start up their own challenger bank which became Monzo.

Both Monzo and Starling are spearheading the new era of digital banking banks in the UK. Both are seeing surges in demand, are growing rapidly and have similar features.

If you are looking for an account to help with your budgeting, then in reliaty either account would give you a similar experience.

Overall, not much separates these two and both promise to revolutionise your finances. I have both accounts and personally, I feel Starling is more grown-up and serious. In contrast, Monzo feels younger and more playful.

Starling also appears to be building a more solid business, focusing on profitability. Whereas Monzo seems to be focused on growth by customer acquisition.

General user feedback has been that that Monzo has a cleaner interface and the app is more intuitive. This has helped Monzo win Best Banking App at the 2019 and 2020 British Bank Awards. Starling, on the other hand, has taken the Best British Bank for the last three years and Best Current Account 2019 and 2020.

In summary, both accounts are great and include features that put high-street accounts to shame. You can head our full Starling review here.

Monzo bank review - final thoughts

Monzo is making people talk about individual banking, which is great. New features are constantly being added and those changes are being driven by its customer’s feedback.

Also, Monzo promises to be a bank for its users and has lofty goals, which we really like. There is also a dedicated community of fans who want the bank to succeed and are keen to see it continue to develop. Overall, we love the app and find it very easy to use.

What do you think? Are you a Monzo fan or is it just a fad? Is Monzo going to get consumed by a larger bank? Has Monzo helped you budget or do you just want a sexy pink card? We would love to hear what you think over in our UK Personal Finance Club on Facebook.

Join the private Eat Sleep Money Personal Finance Club with like-minded individuals sharing knowledge and improving their personal finances.

Here’s to Financial Fitness

EatSleepMoney.co.uk does not offer financial advice and is intended for reference/information only. Remember, you should always carry out your own research and/or take specific professional advice before choosing any financial products or services or undertaking any business or financial venture. If you need financial advice Unbiased can connect you with a suitable professional for free. Investments may go up as well as down and you may get back less than you put in.