I guess my take / attitude is different, in that I’m quite happy for Monzo to take on that complexity if it provides me with a nice user experience, particularly if in the grand scheme of things it’s a simpler / lower risk approach that Monzo can take to provide some additional (much needed) functionality. Time will tell as to how useful and effective it is in practice
I put “challenge” in quotes because you’re right… it isn’t a significant overhead, and with faster payments my money remains accessible and can be moved pretty much wherever I need it to be very quickly. It’s certainly a minor inconvenience when compared with the benefit of a slightly higher interest rate than I could get with either Monzo, or my previous bank. That said, if I could manage all of my finances from a single pane of glass, I’d see that as a real benefit…
I would normally agree with you on that point, but actually there are many savings accounts that have a minimum limit of £1000 or above in order to attract a higher interest rate. It’s an unfortunate reflection of the industry in low interest economic situations.
I suspect that the picture may change in time though
I just invested into easy access savings at 3.9% with Plum (Ratesetter) by simply sending two Facebook messages (one was to confirm). I really hope Monzo can match this simplicity and attractive interest rate!
The current standard rate for instant-access risk-free interest (that isn’t a loss leader subsidised by the bank to retain customers) is about 1.3% so I’d be very impressed if it was any higher than that.
Think I disagree with this personally and from experience.
I’m fairly good with my money and have been for a while, but my girlfriend has historically not been. She wanted to start getting out of her overdraft and saving, and I suggested a monzo account. With monzo’s great features she proceeded to get out of her overdraft and start saving. This has nothing to do at all with interest and wouldn’t have ever made a difference.
The tools currently monzo provide allow people that are not good at saving to start doing so. Once you’ve managed this, this extra bonus once you manage to get to a grand is great! An added bonus on top of all the current tools Monzo give you to learn how to save. I think this is a great way to introduce the feature and slowly roll it into the app.
Personally I chose to keep all my money in Monzo due to these features it current provides, and so seeing this savings pot option coming in is just more great news for me, but regardless interest or not, myself (and i’m sure many others) are full monzo regardless, just because the app features provide more benefit than a bit of interest is worth regardless.
The high barrier of entry will prevent many people who don’t have a lot to earn a small bit of interest. This is something banks should provide. On this point, I know that Monzo is providing a great service for many people aren’t wealthy by having a great app, teaching people about money, banking and budgeting.
What bothers me most is that interest can’t be earned on money in all pots. I’ve been using a number of pots to set money aside for different purposes — as a number of others do — but in order to earn any interest on this, it has to be lumped into one account.
Most of the points you mention will change as time goes on and the marketplace gets introduced with multiple providers. At the moment this is more of a proof of concept I guess.
I will need to take a lot of time to read through terms and conditions. Is my relationship with Monzo- or with the partner? How to I ensure my pot is protected? Will it be FCA protected? Lots of questions!
I’d struggle to call it ‘disappointing’ since I can’t really be disappointed that Monzo don’t yet do what all other banks also don’t do. I agree that it’s an ideal, though, since I use my pots in the same way as you I think.
Until Pots were a thing, I did have all my various bits and pieces in a common interest bearing account and I really don’t want to go back to that (Although the larger sums are still in there - I havent yet gone #fullpots…).
“When you earn interest on a savings pot, your money will actually held by our partner bank.”
It would appear the pot is more or less a wrapper for a savings account. Having multiple pots pointing to the same account and displaying different amounts each time is no doubt at the very least technically complex, so you can understand why they’ve stuck with a 1-1 relationship.
Thing I keep reminding myself is that this is not only a Minimum Viable Product but also a test run of the marketplace concept. Hopefully if it does well then Monzo can find other partners with other savings products on offer, and in the long term you will be able to earn interest on all pots if you want, through having each associated with a different savings account.
I’m looking forward to a future where you can have three savings pots effectively representing low, medium and high risk savings. It feels like that would be a good way of managing savings, seeing what’s performing well, and giving a better idea of how to spread further savings.
In the short term I await the details relating to this first particular savings account and will open one if the conditions are right for me. I think rate of interest is going to be the most important consideration, and second to that what restrictions and/or penalties there are for early withdrawals.
£1000 minimum is too high for the average household, I think. Especially for the 16 and 17 year olds that recently joint Monzo this is far too high. It becomes really difficult for me to encourage my kids to save money if there is no reward for saving. I suggest to lower the bar to £100 or even £50, so young people can also get rewarded for saving from their very small salaries.
I expect it will be a specialist savings bank (i.e. a bank that doesn’t offer current accounts) rather than a well-known high street bank. It wouldn’t make much sense for a high street bank to offer savings accounts through Monzo, at least not at this stage. But it makes a lot of sense for savings banks who don’t have their own current account customers to do so.
A common feature of Easy Access accounts at specialist savings banks is a £1,000 minimum deposit (or minimum interest paying deposit) which would explain the £1,000 minimum in the blog post
£100 would earn just over £1.50 a year in interest at current rates, being realistic this would cost the bank more to pay and run than is worthwhile. Even at £1,000 the interest will be maybe £15-20 in a year.
Will the interest pot be available in the joint accounts? Or when joint pots come, could they be interest-bearing? I look after my savings, and our joint savings, so just two interest-bearing pots would be perfect for me, but we have no need for a joint account otherwise.
