After using monzo for a bit I finally decided to switch fully today, but I’m thinking of cancelling!
After actually reading my statements, I was shocked that monzo offers a big fat 0% interst rate on its current account, while the BoE base rate is currently on 4%. Unlike any other bank account I’ve ever had, in order to get any interest, you have to move your money into a seperate ‘pot’. Do I understand correctly I now need to spend my entire day managing the money in my account to ensure I always have enough money in my current account to cover direct debits, ATM withdraws, bank transfers etc?
I’ve always appreciated how monzo is making banking easier for us all, so this just seems totally regressive, or am I missing something? To be honest, this actually seems like a way for monzo to avoid having to pay out interest to customers.
None of these offer interest on your balances without paying, which mitigates the point of interest on your balance. There are saving accounts linked to these, but it’s not common practice.
The days of current accounts earning interest are definitely behind us (and have been for a while).
If you want a free current account with interest (albeit not great rates) then I know Zopa’s Biscuit account offers 2% and Chase offer savings accounts that work like current accounts with 2.75%. However unless your bills are massive and/or going out well after payday you are not going to be earning a lot of interest each month.
I have one standard pot for my bills and top that up each month when I get paid and then all the bills come out a day or two after payday. The rest of my money is then mostly moved into various savings pots (or out of Monzo to a higher interest savings account) with just my “spending” money in the main account. If that does get low I’ll just move it over manually as needed. It’s definitely not an entire day job to manage your money unless you really are desperate for the extra few pennies in interest you’re missing out on.
You clearly haven’t had many other bank accounts. Virgin is the only bank I’m aware of which pays interest on their ordinary current account, and that’s only 1%.
My Nationwide FlexDirect does, but it’s definitely not standard for accounts to pay interest. I’m more surprised that you’re under the impression it’s commonplace and Monzo is the outlier here. Who do you bank with currently? If you’ve not switched banks for a while I suppose you might not realise but as others have said, it’s not something the majority of regular current accounts offer.
Thanks for all the replies! Looks like I’ve been living under a rock for the last decade and things have changed, probably since moving to 0% interest rate environment after 2007. My current bank offers 1% up to £1500. Thanks also for highlighting kroo.
I suppose now banks compete on the convenice of their apps and other services like using your card abroad.
Give kroo a chance i know a lot of people on here dont like kroo but they have just updated the app and now have a search facility the app is slowly improving the only thing missing for me at the moment is being able to change spending categories like you can with monzo as sometimes the merchant goes into the wrong categories and you cant change it yet
It’s actually really good to see most UK banks have been gradually removing the fees for using your card abroad, so it’s now pretty much a standard thing. If I had to choose between that and current account interest, it’s an easy choice!
At the moment, as it’s in ‘start up’ mode and so is trying to attract people, LHV Bank is offering 3% interest on a current account.
However, it’s more of a ‘beta’ account - definitely would not recommend moving over to them as your main account at the moment. I don’t believe they even accept Direct Debits yet.
Also - although you’re talking about they’re standard free Current Account, Monzo does offer 3.75% on their paid current accounts so maybe double-check those and see if it’s worth switching.
I was paying £18 a month for Greenflag Breakdown - so I’ve switched to Monzo Max for £17 and that includes RAC cover.