Monzo Review — The Future of Digital Banking?

The world doesn’t need another online bank. Or does it?

Monzo isn’t technically a bank — it’s a personal finance app that offers banking services. But Monzo can do almost everything your current bank can, and in a mobile-friendly package to boot. With useful budgeting tools and above-and-beyond security features, it’s better than a traditional bank account in some ways too.

If you’re unhappy with your current bank or just want to see what else is out there, Monzo is worth a look. Just be sure to understand where it excels and where it falls short before you apply.

What Is Monzo?

Monzo is a financial technology app that can help you manage your spending money, savings, and household budget.

Monzo first launched in the United Kingdom, but it has a separate platform for customers in the United States now. The app includes comprehensive spending features that can replace a traditional checking account. It also has savings tools, though it doesn’t pay any interest.

Because it’s relatively new, Monzo is likely to add new features and capabilities in the coming months and years. Though subject to change, its public roadmap provides a preview of future initiatives.

What Sets Monzo Apart?

Monzo has some notable features that set it apart from most other personal finance apps:

• Useful budgeting tools. Monzo automatically tracks and categorizes your purchases, giving you more insight into your spending patterns than a typical bank account.
• Fee-free overdraft protection. Monzo offers overdraft protection at no cost to users. It does deserve the right to decline specific transactions, but you don’t pay a fee if it allows your account balance to go negative.
• Robust security features. All personal finance apps with built-in bank accounts must have stringent security protocols, but Monzo goes above and beyond with instant transaction notifications, biometric authentication, and one-tap card locking and unlocking.
• No account fees (third-party fees may apply). Monzo has no recurring account fees, no ATM fees, and no foreign transaction fees. Third-party fees may still apply, especially with international vendors, but you never pay a fee directly to Monzo.
• Transparency around current initiatives and future plans. Monzo’s public roadmap offers a detailed view of the app’s in-progress initiatives and future plans. It runs on user feedback, so you can suggest and track improvements to the app.

Is Monzo Legit?

Yes, Monzo is legitimate. Though it’s relatively new to the United States and has little name recognition, it’s quite popular (over 7 million downloads) and is backed by an FDIC-insured U.S.-based bank (Evolve Bank & Trust). Monzo has a longer track record in the United Kingdom and appears to have built up goodwill among users there.

Key Features of Monzo

Monzo has the core spending, saving, money management, and budgeting capabilities you’d expect a modern financial app to have. Despite some important limitations, it’s a plausible replacement for a traditional brick-and-mortar or online bank.

Spending Account

Monzo is built around a spending account that operates exactly like a checking account. There’s no monthly maintenance fee or any other recurring fees, and you can make as many withdrawals or deposits as you’d like.

Mastercard Debit Card

Monzo comes with a Mastercard debit card that’s accepted at millions of locations worldwide. There’s no fee to use the card. You receive a physical card within a few business days of opening your account, but you can add a digital version to your digital wallet as soon as your account is open. 

Savings Pots

This is Monzo’s savings feature. Pots are essentially savings subaccounts you can earmark for specific goals or simply use to separate your cash into more manageable buckets. 

You can have up to 20 pots at one time. You can automate transfers into and out of any pot, making it easy to save a few dollars each toward multiple goals at a time.

Early Direct Deposit

If your employer or benefits payer qualifies, you can get paid up to two days early with Monzo. If you normally get your paycheck on Friday, you get it on Wednesday instead. You can also split your paycheck between your Monzo spending account, your savings pots, and one or more external accounts if you wish.

Budgeting Tools

Monzo automatically tracks and categorizes your purchases, giving you visibility into how and where you’re spending your money. If you use it as your primary spending and saving app, this visibility is comprehensive. 

You can also use pots for envelope budgeting, with each pot assigned a spending category. And if you link external financial accounts, you can see how much is coming and going to those each month.

Joint Accounts

Monzo allows you to set up a shared joint account that’s separate from your personal account. Your joint account has its own debit card and a separate account number, so there’s no risk of commingling funds between your personal and joint accounts.

You can set up a joint account with anyone as long as they live in the United States and meet other basic qualifications, like being at least 18 years old. The most common joint account holder is a spouse or domestic partner, but you can also use a joint account to pool resources with a roommate or family member who doesn’t live with you.

Fee-Free ATM Network

Monzo has more than 40,000 fee-free ATMs. You pay no surcharges to withdraw cash at these ATMs, though the ATM owner may charge third-party fees outside Monzo’s control.

Fee-Free Overdraft Protection

Monzo reserves the right to decline transactions that would result in a negative balance. However, if it allows them to go through, Monzo charges no overdraft fees. You just have to make a deposit that’s at least equal to the negative amount, which you can wait for your next paycheck to do.

Digital Bill Pay

Monzo has a digital bill pay feature that lets you make electronic payments to external billers, such as utility companies and credit card issuers. Importantly, this feature can’t send paper checks, so you need to find another way to pay your rent if the property owner demands old-fashioned paper.

Public Roadmap

Monzo’s public roadmap is an unusually transparent window into Monzo’s current initiatives and future plans. Any user can suggest improvements or new features, which Monzo’s staff then has discretion to add to the roadmap. 

Monzo makes no guarantees any particular feature makes it into the app on any particular timeline. But based on past activity in the roadmap, it makes a good-faith effort to integrate reasonable suggestions and has improved the app using user feedback.

Deposit Insurance

Balances in your Monzo account (including spending and pot balances) are FDIC-insured up to the current limit of $250,000. Monzo’s banking partner, Evolve Bank & Trust, is an FDIC member institution.

Advantages

Monzo has a lot of positives. It costs little if anything to use, offers separate joint and personal accounts within the same app, and goes above-and-beyond on account security.

• No monthly or annual fees. Monzo charges no monthly or annual fees. In fact, it charges no recurring fees at all, so it costs nothing to use.
• No overdraft fees. Monzo charges no overdraft fees when your account balance goes negative. It reserves the right to decline transactions that would result in a negative balance, but if it allows them, you don’t pay anything on top of the transaction value.
• Get paid up to two days early. With Monzo, you can get your paycheck up to two days early (for example, Wednesday instead of Friday) with direct deposit if your employer qualifies. That’s a nice benefit if you live paycheck to paycheck or are waiting for a paycheck for a big purchase.
• Separate joint and personal accounts within the same app. Monzo allows you to have two accounts within the same app interface: a personal account for your own expenses and a joint account for expenses shared with a spouse, domestic partner, roommate, or anyone else. That’s a convenient feature many traditional banks don’t offer.
• Instant transaction notifications. Monzo instantly notifies you of transactions made on your account. That’s particularly useful if you share a joint account with someone else, though it’s also a nice security feature that could give you a heads up about compromised card info.
• Big fee-free ATM network. Monzo has more than 40,000 fee-free ATMs in its network, which spans the continental United States. If you still use cash regularly, that’s a big advantage over online banks and finance apps that charge ATM fees.
• Easy card lock and unlock capabilities. This is another notable Monzo security feature. If you can’t find your card or leave it at home when you travel, you can easily lock it until it’s back in your possession. Many banks and money management apps have this feature, but Monzo’s is particularly easy to use.
• No additional foreign transaction fees. Monzo charges no foreign transaction fees of its own. Mastercard may charge currency exchange fees for purchases made overseas or with international vendors, but there’s no surcharge on top of that. Many other banks and credit card issuers do charge their own foreign transaction fees.

Disadvantages

Monzo is missing some important features, at least for now. The biggest gaps are interest on balances, ability to send checks, and the ability to deposit cash or checks into your account.

• No interest on balances. Monzo pays no interest on spending or pots balances — at least, not yet. Monzo’s public roadmap shows interest on balances as a future initiative, but the timeline is unclear. 
• No rewards on debit card purchases. Monzo has no spending rewards program. That’s a downside in comparison to the growing number of finance apps that offer a return on spending.
• No cash or check deposits. Monzo can’t accept cash or paper check deposits. Many competing apps allow cash deposits at retail locations like Walgreens and CVS, and a growing number have mobile check deposit features. Monzo could add this capability in the future, but there’s no timeline for that as of yet.
• No check-based bill pay. You can’t send paper checks through Monzo. While not common overall anymore, it’s a big issue for renters who have to use checks.

How Monzo Stacks Up

Monzo shares the spotlight with dozens of other financial apps. Before you open an account, compare it against close competitors like Albert.

Final Word

Monzo is not a full-service online bank, but it has nearly everything you need to manage your finances and save for the future. It boasts a fee-free spending account, an optional joint account that’s ideal for shared expenses, and up to 20 subaccounts that can really up your budgeting game or help you save for the future.

But Monzo falls short in some important ways. It doesn’t pay interest on balances, has no rewards program, and can’t accept cash or paper check deposits. If those tradeoffs are acceptable, then it could be right for you. Otherwise, there are plenty of other mobile finance apps out there.